A retroviral vector was used to transfer a large library of cDNAs from the 32D murine hemopoietic cell line to NIH3T3 fibroblasts, for the purpose of selecting cDNAs that induce oncogenic transformation. One highly transformed colony arising in the infected NIH3T3 cell culture contained a provirus with a 1900 bp cDNA insert. After recovery and reincorporation into a retroviral vector, this cDNA induced rapid morphological transformation and proliferation when expressed in NIH3T3 or C3H10T1/2 fibroblast cell lines. The transforming cDNA encoded a protein, designated Dbs, which had a region of high sequence similarity to the Dbl proto-oncogene. This region included motifs characteristic of the CDC24 family of guanine nucleotide exchange factors, and an adjacent pleckstrin homology domain. Dbs was distinguished from Dbl by an N-terminal extension and the presence of an SH3 domain at its C terminus. Deletions of the Dbs-encoding cDNA demonstrated that transformation of NIH3T3 cells required intact exchange factor and pleckstrin homology domains, but did not require the SH3 domain. In contrast to Dbl, the N-terminal sequences of Dbs did not suppress its transforming activity. The Dbs gene was expressed at low levels in several murine hemopoietic cell lines and in thymus and spleen, and at higher levels in other tissues, particularly in brain. Dbs may be one of a large family of exchange factors which provide cell-type specific pathways for regulating proliferating via the activation of Ras-like proteins.