Expression of the B7-1 (CD80) costimulatory molecule in a variety of tumor cell lines leads to an enhanced CD8+ T cell response to tumor Ags. We used transgenic mice constitutively expressing B7-1 on keratinocytes (K14/B7-1 line) to determine whether keratinocyte B7-1 expression would inhibit the development of papillomas and carcinomas following two-stage chemical carcinogenesis in skin. FVB inbred mice carrying the K14/B7-1 transgene and controls were initiated with 25 micrograms of 7,12-dimethylbenz[a]anthracene and promoted weekly with 5 micrograms of 12-O-tetradecanoylphorbol-13-acetate for 20 wk. Expression of the B7-1 transgene did not result in statistically significant decreases in the mean number of papillomas or carcinomas compared with controls. The incidence of carcinomas in both transgenic and control mice reached 90% or greater by 60 wk after initiation. Carcinoma cell lines established from the K14/B7-1 mice maintained expression of B7-1 and Kq. These B7-1 expressing carcinomas grew progressively following intradermal injection into syngeneic FVB mice, further demonstrating their inability to evoke protective tumor immunity. These same carcinoma cell lines were rapidly rejected by minor alloantigen-mismatched SWR mice, confirming their susceptibility to immune effector mechanisms. The failure of constitutive B7-1 expression on keratinocytes to prevent the growth of squamous cell papillomas and carcinomas may reflect the limited immunogenicity of tumors arising after initiation-promotion carcinogenesis. Our results in this transgenic model system are further evidence that B7-1 gene therapy alone may not be sufficient to induce protective immunity to some types of tumors.