Gamma Glutamyltranspeptidase (GGTase)-positive foci have been used to indicate activity in an initiation/promotion bioassay in rat liver. This rat liver foci bioassay has been proposed for inclusion in tier 2 of a three tier decision tree approach to carcinogenesis testing where it would function to confirm carcinogenic activity. The assay was sensitive to hepatocarcinogens and some non-hepatocarcinogens and was able to distinguish between tumor initiators and tumor promoters. The induction of GGTase-positive foci by methylating agents was associated with the formation of O sup 6 methylguanine and not N-7 methylguanine, which would indicate a mutagenic origin for the foci. The foci once induced did not regress over the life time of the animal. Zonal induction of GGTase activity was induced by some promoters which confounded the scoring of foci incidence. The results to date indicate that the rat liver foci bioassay warrants further validation for inclusion in tier 2 and emphasizes the need to demonstrate the predictive and precursor relationship of GGTase-positive foci to cancer. (Copyright (c) 1982 by the Society of Toxicologic Pathologists)