ALV-induced erythroblastosis results from the specific interruption of the host oncogene, c-erbB, by the insertion of an intact provirus. Integrated proviruses are oriented in the same transcriptional direction as c-erbB, and expression of truncated c-erbB transcripts is observed. Evidence, including sequence analysis of cDNA clones, indicates that transcription of truncated c-erbB mRNA is initiated in the 5' LTR of the integrated provirus. This transcript is processed through a series of remarkable splicing reactions to yield viral gag and env sequences fused to erbB sequences. These results establish a novel pathway of promoter insertion oncogenesis that stands in contrast to the pathways used in the activation of c-myc in B lymphomas.