Exposure to toxicants leads to cumulative molecular changes that overtime increase a subject's risk of developing urothelial carcinoma. To assess the impact of arsenic exposure at a time progressive manner, we developed and characterized a cell culture model and tested a panel of miRNAs in urine samples from arsenic-exposed subjects, urothelial carcinoma patients, and controls. To prepare an in vitro model, we chronically exposed an immortalized normal human bladder cell line (HUC1) to arsenic. Growth of the HUC1 cells was increased in a time-dependent manner after arsenic treatment and cellular morphology was changed. In a soft agar assay, colonies were observed only in arsenic-treated cells, and the number of colonies gradually increased with longer periods of treatment. Similarly, invaded cells in an invasion assay were observed only in arsenic-treated cells. Withdrawal of arsenic treatment for 2.5 months did not reverse the tumorigenic properties of arsenic-treated cells. Western blot analysis demonstrated decreased PTEN and increased AKT and mTOR in arsenic-treated HUC1 cells. Levels of miR-200a, miR-200b, and miR-200c were downregulated in arsenic-exposed HUC1 cells by quantitative RT-PCR. Furthermore, in human urine, miR-200c and miR-205 were inversely associated with arsenic exposure (P = 0.005 and 0.009, respectively). Expression of miR-205 discriminated cancer cases from controls with high sensitivity and specificity (AUC = 0.845). Our study suggests that exposure to arsenic rapidly induces a multifaceted dedifferentiation program and miR-205 has potential to be used as a marker of arsenic exposure as well as a maker of early urothelial carcinoma detection.