The EWS/TEC gene fusion generated by the t(9;22) chromosomal translocation found in extraskeletal myxoid chondrosarcomas encodes a fusion protein containing the amino-terminal domain of the EWS protein fused to the whole coding sequence of the orphan nuclear receptor TEC. We have compared the DNA-binding and transcriptional activation properties of various TEC isoforms and the corresponding EWS/TEC fusion proteins. Band-shift experiments show that the full-length TEC receptor can efficiently bind the NGFI-B Response Element (NBRE), whereas an isoform lacking the entire carboxyl-terminal domain of the receptor binds much less efficiently the NBRE. Addition of the amino-terminal domain of EWS to either isoforms does not alter significantly their DNA-binding properties to the NBRE. Co-transfection experiments of COS cells and human chondrocytes indicate that whereas TEC moderately activates transcription from a NBRE-containing promoter, the corresponding EWS/TEC fusion protein is a highly potent transcriptional activator of the same promoter, being approximately 270-fold more active than the native receptor. EWS/TEC may thus exert its oncogenic potential in chrondrosarcomas by activating the transcription of target genes involved in cell proliferation.