Modulation of telomerase activity was investigated in the spontaneously immortalized SIK human epidermal cell line. Although these cells displayed low telomerase activity in early passage, similar to that in normal human epidermal cells, the activity was found to be markedly stimulated by cultivation in the presence of epidermal growth factor (EGF). This stimulation was evident in later passage as well, but the relative increase was not as marked inasmuch as the basal activity increased with passage. Normal human epidermal cells in culture displayed low telomerase activity shortly after inoculation and it decreased further with time, reaching minimum levels several days after cultures became confluent, independently of EGF addition. SIK cultures grown in the absence of EGF behaved similarly. However, addition of EGF to these cultures prevented the telomerase decrease otherwise observed in log-phase growth. In the presence of EGF, telomerase activity was maximal approximately 12 days after inoculation and then decreased considerably at confluence. In the absence of EGF, telomerase activity was increased by UV exposure despite its suppressive effect on keratinocyte growth. In the absence of EGF, the protein tyrosine phosphatase inhibitor vanadate stimulated growth marginally and did not have a pronounced effect on telomerase. In the presence of EGF, however, vanadate antagonized EGF action on cell growth and on telomerase activity, and it stimulated spontaneous envelope formation in a dose-dependent manner. Thus the spontaneously immortalized SIK line provides a useful model for study of telomerase modulation during the neoplastic progression of keratinocytes.