The development of resistance to terminal differentiation is an early event in epidermal neoplasia. Altered differentiation can be detected in vitro since normal epidermal cells are induced to differentiate in medium with Ca2+ greater than 0.1 mM while neoplastic epidermal cells and keratinocytes transduced with a v-rasHa gene are resistant to Ca2+. In normal epidermal cells, the elevation of extracellular Ca2+ (Cao) from 0.05 to 1.2 mM causes a biphasic intracellular Ca2+ (Cai) response in which a transient (10 min) peak of 4-5-fold over basal values is followed by a sustained (greater than 24 h) 2-fold increase in steady-state Cai. The transient peak in Cai is dependent on a serum component and independent of Cao, while the sustained plateau is directly dependent on Cao. The transient peak responding to a serum factor is lost in normal cells after 24 h in 1.2 mM Ca2+, a time when these cells are differentiating. Two neoplastic keratinocyte cell lines, SP-1 and 308, which produce benign tumors in vivo, also have a biphasic Cai response to an increase in Cao. In these cells, the transient peak is also serum dependent and amplified to 10-fold over basal values. However, the plateau value is not sustained and returns to basal values by 8 h, independent of Cao. Furthermore, 308 cells remain sensitive to the serum-induced Cai transient after 24 h in 1.2 mM Ca2+. To determine whether the activating c-rasHa mutation in 308 and SP-1 cells was responsible for the altered Cai regulation, a v-rasHa gene was introduced into normal keratinocytes by a defective retrovirus. This also produces the papilloma phenotype in vivo. Recipient cells were resistant to Ca(2+)-induced terminal differentiation although they did not proliferate in 1.2 mM Ca2+. The Cai profile in response to 1.2 mM Ca2+ was identical in normal and v-rasHa keratinocytes, and these cells lost the serum-induced transient Cai peak after 24 h. Thus, the activation of the c-rasHa gene in 308 or SP-1 cells is probably not solely responsible for the altered Cai response in neoplastic cell lines. Sustained physiological elevation of Cai may be relevant to the loss of proliferative potential in both normal and v-rasHa keratinocytes in 1.2 mM Ca2+. In addition, v-rasHa-mediated or activated c-rasHa-mediated changes in a complementary pathway may contribute to the block in terminal differentiation in neoplastic cells.