Human small airway epithelial cells (SAECs) previously immortalized with human telomerase reverse transcriptase (h-TERT) were continuously treated with sodium arsenite at a dose of 0.5 microg/mL in culture for up to 6 months. Arsenic-treated cells progressively displayed an increase in transformed phenotype including enhanced growth saturation density, plating efficiency, and anchorage-independent growth and invasion capability compared with their nontreated control cells. To determine whether arsenic-induced cell transformation was associated with genomic instability, treated and control cells were also analyzed for micronuclei formation. A 4.8-fold increase in micronuclei incidence in arsenic-treated cells was detected in conjunction with increased N-phosphonacetyl-l-aspartate (PALA)-resistant characteristics. In addition, arsenic-treated cells showed an increase in c-H-ras, c-myc, and c-fos protein expression relative to controls. The change in oncoprotein expression correlated with a decrease in wild-type p53 expression and hyperphosphorylated retinoblastoma. Taken together, these results strongly suggest that h-TERT immortalized human small airway epithelial cells underwent step-wise transformation after inorganic arsenic treatment.