The 11;22 chromosomal translocation specifically linked to Ewing sarcoma and primitive neuroectodermal tumor results in a chimeric molecule fusing the amino-terminal-encoding portion of the EWS gene to the carboxyl-terminal DNA-binding domain encoded by the FLI1 gene. We have isolated a fourth EWS-FLI1 fusion cDNA that is structurally distinct from the three forms previously described. To determine the transforming activity of this gene, alternative forms of the EWS-FLI1 fusion were transduced into NIH 3T3 cells. Cells expressing either type 1 or type 4 fusion constructs formed foci in culture and colonies in soft agar, indicating that EWS-FLI1 is a transforming gene. EWS-FLI1 deletion mutants were created to map functionally the critical regions within the chimera. Deletion of either the EWS domain or the FLI1 corresponding to the DNA-binding domain totally abrogated the ability for EWS-FLI1 to transform 3T3 cells. These data indicate that the oncogenic effect of the 11;22 translocation is caused by the formation of a chimeric transcription factor. Formation of chimeric transcription factors has now been demonstrated to promote tumors of both neuroectodermal and hematopoietic origin, suggesting that this may be a common mechanism in human carcinogenesis.