CEACAM1 is a multifunctional Ig-like cell adhesion molecule expressed by epithelial cells in many organs. CEACAM1-4L and CEACAM1-4S, two isoforms produced by differential splicing, are predominant in rat liver. Previous work has shown that downregulation of both isoforms occurs in rat hepatocellular carcinomas. Here, we have isolated an anchorage dependent clone, designated 253T-NT that does not express detectable levels of CEACAM1. Stable transfection of 253-NT cells with a wild type CEACAM1-4S expression vector induced an anchorage independent growth in vitro and a tumorigenic phenotype in vivo. These phenotypes were used as quantifiable end points to examine the functionality of the CEACAM1-4S transmembrane domain. Examination of the CEACAM1 transmembrane domain showed N-terminal GXXXG dimerization sequences and C-terminal tyrosine residues shown in related studies to stabilize transmembrane domain helix-helix interactions. To examine the effects of transmembrane domain mutations, 253-NT cells were transfected with transmembrane domain mutants carrying glycine to leucine or tyrosine to valine substitutions. Results showed that mutation of transmembrane tyrosine residues greatly enhanced growth in vitro and in vivo. Mutation of transmembrane dimerization motifs, in contrast, significantly reduced anchorage independent growth and tumorigenicity. 253-NT cells expressing CEACAM1-4S with both glycine to leucine and tyrosine to valine mutations displayed the growth-enhanced phenotype of tyrosine mutants. The dramatic effect of transmembrane domain mutations constitutes strong evidence that the transmembrane domain is an important determinant of CEACAM1-4S functionality and most likely by other proteins with transmembrane domains containing dimerization sequences and/or C-terminal tyrosine residues.