The human c-fps/fes proto-oncogene is expressed as a transcript of about 3.0 kb in both normal and leukemic myeloid cells. We have detected truncated c-fps/fes transcripts of about 0.9 kb in a panel of human lymphoma and lymphoid leukemia cell lines, but not in normal untransformed hematopoietic cells. Analysis of the chromatin structure of the c-fps/fes gene revealed DNAase I-hypersensitive sites in the 5' region of the gene and in exon 16. The presence and absence of these sites correlates with the expression of the 3.0 kb and 0.9 kb c-fps/fes RNAs respectively. The truncated transcripts initiate at two distinct sites within exon 16 of the c-fps/fes gene. The genomic region 5' to the transcription initiation sites is G+C rich but does not contain typical promoter consensus sequences. Sequence analysis of a cDNA clone of the truncated c-fps/fes transcripts did not reveal any point mutation and the truncated transcripts are normally spliced using the regular splice donor and acceptor sites. A putative open reading frame encompasses the phosphotransfer motif and the autophosphorylation site of the fps/fes kinase domain. In vitro transcription/translation of a cDNA clone corresponding to the truncated c-fps/fes transcripts revealed a protein of 17 kDa. There are no translocations or rearrangements in or around the c-fps/fes gene in cell lines which express the truncated c-fps/fes transcripts. This alternative transcription of c-fps/fes may indicate a novel activation process of this proto-oncogene.