Homozygous loss of the warts (wts) gene of Drosophila, caused by mitotic recombination in somatic cells, leads to the formation of cell clones that are fragmented, rounded, and greatly overgrown compared with normal controls. Therefore, the gene is required for the control of the amount and direction of cell proliferation as well as for normal morphogenesis. The absence of wts function also results in apical hypertrophy of imaginal disc epithelial cells. Secretion of cuticle over and between the domed apical surfaces of these cells leads to a honeycomb-like structure and gives the superficial wart-like phenotype of mitotic clones on the adult. One wts allele allows survival of homozygotes to the late larval stage, and these larvae show extensive imaginal disc overgrowth. Because of the excess growth and abnormalities of differentiation that follow homozygous loss, we consider wts to be a tumor suppressor gene. The wts gene is defined by the breakpoints of overlapping deficiencies in the right telomeric region of chromosome 3, region 100A, and by lethal P-element insertions and excisions. It encodes a protein kinase that is most similar to human myotonic dystrophy kinase, the Neurospora cot-1 protein kinase, two cell-cycle regulated kinases of yeast, and several putative kinases from plants. These proteins define a new subfamily of protein kinases that are closely related to but distinct from the cyclic AMP-dependent kinases. Although myotonic dystrophy is defined by a neuromuscular disorder, it is sometimes associated with multiple pilomatrixomas, which are otherwise rare epithelial tumors, and with other tumors including neurofibromas and parathyroid adenomas. Our results raise the possibility that homozygous loss of the myotonic dystrophy kinase may contribute to the development of these tumors.