It has been hypothesized that genomic instability is an important component of tumorigenesis. In an attempt to establish this relationship, we determined the frequencies with which two nontumorigenic and four tumorigenic rat liver epithelial cell lines underwent a particular type of genetic instability, gene amplification. By exposing cells to N-(phosphonoacetyl)-L-aspartate (PALA), a drug which specifically inhibits the aspartate transcarbamylase activity of the multifunctional CAD enzyme and selects for amplification of the CAD gene, we observed a striking parallel between the ability of these cell lines to become resistant to this drug and the ability of these same cells to form tumors after injection into day-old syngeneic rats. Cells of one highly tumorigenic line became resistant to PALA greater than 70 times more often than those of a non-tumorigenic line. Molecular analyses of eight independent PALA-resistant subclones confirmed that, in each case, this resistance was due to amplification of the CAD gene. Thus, our results demonstrate the relationship between tumorigenicity and at least one measure of genomic instability, CAD gene amplification. The method developed in this study provides a quantitative, rapid indicator of tumorigenicity and should prove useful in trying to elucidate the underlying basis of genomic instability in neoplastic cells.