We recently detected a novel activated oncogene by transfection analysis on NIH 3T3 cells in five out of 20 primary human thyroid papillary carcinomas and in the available lymph node metastases. We designated this transforming gene PTC (for papillary thyroid carcinoma). Here we describe the molecular cloning and sequencing of the gene. The new oncogene resulted from the rearrangement of an unknown amino-terminal sequence to the tyrosine kinase domain of the ret proto-oncogene. This gene rearrangement was detected in all of the transfectants and in all of the original tumor DNAs, but not in normal DNA of the same patients, thus indicating that this genetic lesion occurred in vivo and is specific to somatic tumors. Moreover, the transcript coded for by the fused gene was detected in an additional PTC-positive human papillary carcinoma for which mRNA was available.