Vaccinia virus transformed mouse and human cells have been exposed to varying concentrations of methotrexate (MTX) and examined for inhibition of cell replication and the production of infectious virus. MTX induced vaccinia production in cells of mouse origin and increased the production of this virus in cells of human origin 100–1000 times. The optimum concentrations for induction were those which inhibited cell replication to 40–60 per cent of control. This effect was not characteristic of MTX because it was also exerted by 5-fluorouracyl or mitomycin C. Transformed cells of human origin treated with step wise increasing concentrations of MTX developed a partial resistance to the action of the drug but were not “cured” from viral infection.