Tumorigenesis in mice of the rat insulin promoter [RIP]-simian virus 40 tumor antigen [SV40 Tag] transgenic lineages, RIP1-Tag2 and RIP1-Tag4, is a process initiated by expression of SV40 Tag in pancreatic beta cells, evolution of islet cell hyperplasia and insulinoma appearance. Analysis of major histocompatibility complex [MHC] class I gene expression during this process revealed a normal level of MHC class I molecules at the surface of pancreatic islet cells of RIP1-Tag4 mice, while hyperplastic islets from the same mice contained cells expressing a normal level and cells expressing a low level of MHC class I antigen. Insulinomas themselves expressed very low levels or no MHC class I gene product. Thus, down-regulation of MHC class I gene appears to accompany tumor progression of SV40 Tag-transformed beta islet cells. MHC class I antigen expression in a series of clonally derived cell lines of beta cell origin from different SV40 Tag-induced insulinomas ranged from quite low to undetectable, although expression was inducible by interferon-gamma. Nuclear run-on and transient transfection analyses indicated that expression of the MHC class I gene in these cells in controlled at the transcriptional level, and that the decreased expression is paralleled by reduced binding of transcription factors to the R1 element of the H-2 enhancer.