p53 is the gene most frequently found mutated in human neoplasias. In the majority of tumors, p53 mutations contribute to the progression towards stages of increasing malignancy with the appearance of an undifferentiated phenotype. Also in thyroid cancerogenesis, p53 mutations correlate with the loss of the differentiated phenotype. The results presented here, suggest a direct involvement of p53 in the molecular mechanisms regulating cellular differentiation in thyroid since a mutated p53 gene markedly affects the growth potential and differentiated functions of the rat thyroid cell line PC Cl 3. Blockage in the expression of the PAX-8 transcription factor seems to be a key event in the loss of thyroid differentiated functions induced by the mutated p53 gene. Thyroid cells carrying a mutated p53 gene did not form colonies in soft agar or tumors in athymic mice, suggesting that a mutation of the p53 gene is not sufficient for the induction of the malignant phenotype and probably a cooperation with other oncogenes is necessary to accomplish full malignancy. No effect on either growth or differentiation of thyroid cells was exerted either by overexpression of the wild-type p53 gene, or by the vector alone.