The fusion of TEL with platelet-derived growth factor receptor (PDGFR) beta (TPbeta) is found in a subset of patients with atypical myeloid neoplasms associated with eosinophilia and is the archetype of a larger group of hybrid receptors that are produced by rearrangements of PDGFR genes. TPbeta is activated by oligomerization mediated by the pointed domain of TEL/ETV6, leading to constitutive activation of the PDGFRbeta kinase domain. The receptor transmembrane (TM) domain is retained in TPbeta and in most of the described PDGFRbeta hybrids. Deletion of the TM domain (DeltaTM-TPbeta) strongly impaired the ability of TPbeta to sustain growth factor-independent cell proliferation. We confirmed that TPbeta resides in the cytosol, indicating that the PDGFRbeta TM domain does not act as a transmembrane domain in the context of the hybrid receptor but has a completely different function. The DeltaTM-TPbeta protein was expressed at a lower level because of increased degradation. It could form oligomers, was phosphorylated at a slightly higher level, co-immunoprecipitated with the p85 adaptor protein, but showed a much reduced capacity to activate STAT5 and ERK1/2 in Ba/F3 cells, compared with TPbeta. In an in vitro kinase assay, DeltaTM-TPbeta was more active than TPbeta and less sensitive to imatinib, a PDGFR inhibitor. In conclusion, we show that the TM domain is required for TPbeta-mediated signaling and proliferation, suggesting that the activation of the PDGFRbeta kinase domain is not enough for cell transformation.