Expression of oncogenic K-Ras is frequently observed in non-small-cell lung cancer. However, oncogenic K-Ras is not sufficient to transform lung epithelial cells and requires collaborating signals that have not been defined. To examine the biological effects of K-Ras in nontransformed lung epithelial cells, stable transfectants were generated in RL-65 cells, a spontaneously immortalized lung epithelial cell line. Expression of K-Ras resulted in extracellular signal-regulated kinase (ERK) activation, which mediated induction of cyclooxygenase (COX)-2 and increased prostaglandin E(2) production. Epithelial cells expressing oncogenic K-Ras showed increased proliferation in two- and three-dimensional tissue culture and delayed formation of hollow acinar structures in three-dimensional matrigel cultures. These affects were mediated through COX-2-dependent activation of beta-catenin signaling and inhibition of apoptosis. ERK activation also led to induction of metalloproteinase (MMP)-9 and cleavage of E-cadherin at two specific sites. This resulted in partial disruption of adherens junctions as determined by decreased transepithelial resistance (TER), and disruption of E-cadherin/beta-catenin interactions. An MMP-9 inhibitor reversed the decrease in TER and inhibited beta-catenin signaling. These data indicate that although expression of oncogenic K-Ras does not transform lung epithelial cells, it alters the phenotype of the cells by increasing proliferation and decreasing cell-cell contacts characteristic of epithelial cells.