Normal human cutaneous nevi were transplanted to the skin of nude mice and some of the grafts were treated topically with 7,12-dimethylbenz[a]anthracene (DMBA, 1.6 mumol weekly). Histologically proven human skin was present in 22 grafts. In the 9 untreated control grafts, the tendency of nevic cells to form nests and the number of nevomelanocytes decreased with time; the melanocytic cells showed no signs of hypertrophy or atypia. In most of the 14 specimens treated with DMBA, the nevomelanocytes showed distinct signs of hypertrophy. The cells were enlarged and often dendritic and were filled with melanin granules for which the transfer to keratinocytes appeared to be blocked. The nevomelanocytes of 4 of the 9 specimens treated with DMBA for greater than or equal to 82 days (9-16 DMBA applications), showed atypical enlarged nuclei with mitotic figures. Since atypia is one criterion for identifying precursors of transformed cells, the model of human nevi grafted onto nude mouse skin may be useful for studying the various steps involved in the progression of benign melanocytic nevi to malignant melanoma.