In a mouse mammary tumor model system in which carcinogenic progression can be investigated, we have found a unique mutation of Int-3 associated with progression from premalignant lobular hyperplasia to tumor. Sequence analysis of the rearranged fragment revealed an insertion of an intracisternal type A particle (IAP) within the Int-3 gene. Int-3 is mutated frequently in mouse mammary tumor virus (MMTV)-induced mammary tumors by insertion of MMTV proviral DNA into this intragenic region. In these mutations, the insertion produces a chimeric Int-3 transcript encoding the cytoplasmic portion of the Int-3 protein driven by the MMTV long terminal repeat promoter. In this case, the IAP DNA was inserted in the opposite transcriptional orientation relative to Int-3; nevertheless, a similar chimeric RNA transcript driven by a cryptic promoter in the oppositely oriented 5' IAP long terminal repeat was generated. This is the first demonstration that an insertional mutation unrelated to MMTV activates an Int gene commonly associated with mammary tumorigenesis.