Jaagsiekte sheep retrovirus (JSRV) is the causative agent of a contagious lung cancer in sheep that shares similarities with human bronchioloalveolar carcinoma (BAC). JSRV is unique because the envelope gene (env) is the oncogene, as it can transform cells in culture and induce tumors in animals. The phosphatidylinositol 3-kinase (PI3K)-Akt-mTOR and H/N-Ras-MEK-mitogen-activated protein kinase (MAPK) pathways have been shown to be critical for Env transformation. However, the question still remains of how disruption of these pathways relates to tumor formation. To address this, JSRV Env transformation was studied in the context of epithelial structure, using the polarized Madin-Darby canine kidney (MDCK) epithelial cell three-dimensional (3-D) culture system. The results indicated that JSRV Env-transformed MDCK cells were larger and had full or multiple lumens, in contrast to the single lumens observed in controls. The altered phenotype was largely mediated by an increase in proliferation, in addition to overcoming the proliferative suppression signal. JSRV Env was not found to disrupt polarity or tight junctions or to inhibit lumen apoptosis. The PI3K-Akt-mTOR pathway was important for Env transformation in MDCK cells, although the mechanisms of action differed in 3-D and monolayer cultures. PI3K-dependent signaling to mTOR occurred in monolayers, while PI3K-independent signaling to mTOR occurred in 3-D culture. In contrast, the H/N-Ras-MEK-MAPK pathway was found to be inhibitory to transformation in both normal and transformed MDCK cells in 3-D culture. However, in monolayer culture, inhibition of MEK reverted the transformed phenotype, suggesting a different mechanism(s) of action in monolayer versus 3-D culture.