Comparison of amino acid sequences from human epidermal growth factor (EGF) receptor and avian erythroblastosis virus erbB oncogene product suggests that v-erbB represents a truncated avian EGF receptor gene product. Although both proteins are transmembrane tyrosine kinases, the v-erbB protein lacks most of the extracellular ligand-binding domain and a 32-amino acid cytoplasmic sequence present in the human EGF receptor. To test the validity of the proposed origin of v-erbB and to investigate the functional significance of the deleted extracellular sequences, a chimeric gene encoding the extracellular and the transmembrane domain of the human EGF receptor joined to sequences coding for the cytoplasmic domain of the avian erbB oncogene product was constructed. When expressed in Rat1 fibroblasts, this reconstituted gene product (HER-erbB) was transported to the cell surface and bound EGF. Its autophosphorylation activity was stimulated by interaction with the ligand. Expression of the HER-erbB chimera led to anchorage-independent cell growth in soft agar and EGF-induced focus formation in Rat1 monolayers. Thus, it appears that v-erbB protein sequences in the chimeric receptor retain their transforming activity under the influence of the human extracellular EGF-binding domain.