The Federal Panel on Formaldehyde concluded that definitive experiments exist which demonstrate the mutagenicity and carcinogenicity of formaldehyde under laboratory conditions. Formaldehyde induces both gene mutations and chromosomal aberrations in a variety of test systems. Inhalation of formaldehyde causes cancer of the nose in rats. The concentrations of formaldehyde in inhaled air that caused nasal cancer in Fisher 344 rats are within the same order of magnitude as those to which humans may be exposed. The data presently available do not permit a direct assessment of the carcinogenicity of formaldehyde to man. Epidemiologic studies on exposed human populations are in progress and may further clarify the situation. Other experimental and human studies on toxic effects such as teratogenicity and reproductive disorders are as yet inadequate for a health risk assessment. The CIIT 24 month study on animal carcinogenicity has not yet been completely evaluated. Additional data are expected on the effects of prolonged exposure to lower doses of formaldehyde and on the possible carcinogenicity of formaldehyde in the mouse. The panel recommends that, for a comprehensive health risk assessment, further experiments be conducted on the effects of other modes of exposure (ingestion and skin penetration), the effects in humans, and on the pharmacokinetics of formaldehyde in man and animals and the possible role for formaldehyde in reproductive and chronic respiratory disorders. It is the conclusion of the panel that formaldehyde should be presumed to pose a carcinogenic risk to humans.