Jaagsiekte sheep retrovirus (JSRV) that causes contagious ovine pulmonary adenocarcinoma (OPA) in sheep carries an oncogenic Envelope gene (Env), which is capable of transforming target cells in vitro and in vivo. We cloned full-length JSRV Env cDNA into an expression vector, SPC/SV40, where the transgene was driven by lung-specific surfactant protein C (SPC) promoter, to obtain SPC-JSRV Env construct. SPC-JSRV Env was microinjected into immunocompetent FVB/N mice embryos to generate Env transgenic mice. We obtained two lines of transgenic mice, both of which were capable of developing spontaneous lung tumors from 1?month onwards and the tumor incidence rate was about 56% at the age of 7?months in Env Transgenic line 1 and about 71% at the age of 6?months in Env Transgenic line 2. We were able to correlate higher tumor incidence rate and tumorigenicity in Env Transgenic line 2 to higher level of expression of Env transgene compared to Env Transgenic line 1. Immunohistochemical analysis showed that the tumor was primarily composed of type II pneumocytes where SPC promoter is known to be active similar to natural infection of JSRV in sheep. Analysis of cellular mitogenic signal transduction pathways revealed significant induction of p44/42 ERK pathway in the transgenic mice lungs with tumors compared to the lungs from non-transgenic FVB/N mice. Tumors in our transgenic mice pose similarities to human lung adenocarcinoma and therefore our mice could serve as a model system for evaluating the mechanisms of lung tumorigenesis in vivo.