Two endothelial cell lines were derived from grafts of the central nervous system using retrovirus mediated gene transfer to introduce the polyoma middle-T oncogene into fetal rat brain endothelial cells and transplantation of these cells into adult rat brain. In this report, we further characterize these cells and the effect of dexamethasone on the expression of specific enzymatic markers. These cells take up acetylated low density lipoprotein, leucine, and glucose, and express Factor VIII-related antigen, angiotensin converting enzyme, alkaline phosphatase, gamma-glutamyltranspeptidase, and as yet undescribed aminopeptidase A and B-like enzymes. When grown on semi-permeable membranes, these transformed cells do not spontaneously retain small hydrophilic molecules. In culture, one of the lines (EC 193) forms a confluent monolayer of spindle-shaped cells homogenously expressing gamma-glutamyltranspeptidase at a level comparable to primary cells. The other cell line (EC 219) grows as clusters of elongated cells, and gamma-glutamyltranspeptidase activity is expressed mainly in cells forming the clusters. This clustered pattern changes to a confluent one after culture on type-I collagen. Dexamethasone increases angiotensin-converting enzyme activity, and decreases the expression of gamma-glutamyltranspeptidase and aminopeptidase A, whereas the aminopeptidase B activity is little modified. Inhibition of aminopeptidase A activity by amastatin, potentiates angiotensin II effects on DNA synthesis. These results indicate that retrovirally transformed brain endothelial cells are a useful model for studying the blood-brain barrier in vitro and that dexamethasone, an agent with the potential to reduce brain edema, directly affects some blood-brain barrier properties in these endothelial cell lines.