An expression vector containing the murine c-ets-2 protooncogene cDNA was introduced into NIH 3T3 cells by DNA transfection. The cells transfected with this construct showed foci of densely growing, morphologically altered cells, when grown either in low-serum (0.05%) or in serum-free medium. The c-ets-2-derived foci contained additional copies of the c-ets-2 gene, Northern blot analysis demonstrated overexpression of a c-ets-2-specific 2.5-kilobase RNA, and ets-specific antiserum recognized a 56-kDa protein. Overexpression of the c-ets-2-encoded protein stimulated cell proliferation and abolished their serum requirement. The c-ets-2 transfected cells formed colonies in semisolid medium and induced tumors in nude mice, indicating that c-ets-2 can be a transforming gene when overexpressed in these cells. This work demonstrates that a member of the c-ets gene family has transforming and mitogenic activity. In addition, the role of c-ets-2 in cell proliferation and its location in the minimal Down syndrome region on chromosome 21 implicates its involvement in the phenotypic changes associated with Down syndrome.