The TLS-CHOP oncoprotein, found in the majority of human myxoid liposarcomas, consists of a fusion between the transcription factor CHOP/GADD153 and the N terminus of an RNA-binding protein TLS/FUS. Clinical correlation and in vitro transformation assays indicate that the N terminus of TLS plays an important role in oncogenesis by TLS-CHOP. Until now, however, the only activity attributed to the oncoprotein is that of inhibiting the binding of transcription factors of the C/EBP class to certain adipogenic target genes, a function that TLS-CHOP shares with the nononcogenic CHOP protein. Here we report the isolation of a gene, DOL54, that is activated in primary fibroblasts by the expression of TLS-CHOP. DOL54 is expressed in the neoplastic component of human myxoid liposarcomas and increases the tumorigenicity of cells injected in nude mice. Activation of DOL54 requires an intact DNA-binding and dimerization domain in TLS-CHOP, a suitable cellular dimerization partner, and depends on the TLS N terminus. Normal adipocytic differentiation is associated with an early and transient expression of DOL54, and the gene encodes a secreted protein that is tightly associated with the cell surface or extracellular matrix. TLS-CHOP thus leads to the unscheduled expression of a gene that is normally associated with adipocytic differentiation.