The AML1 gene encodes DNA-binding proteins that contain the runt homology domain and is found at the breakpoints of t(8;21) and t(3;21) translocations associated with myelogenous leukemias. From the AML1 gene, two representative forms of proteins, AML1a and AML1b, are generated by alternative splicing. Both forms have the runt homology domain that possesses the DNA-binding ability but, unlike AML1b, AML1a lacks a putative transcriptional activation domain downstream of the runt homology domain. By using retroviral infection, we demonstrated that AML1b causes neoplastic transformation of NIH3T3 cells. AML1b-expressing cells form macroscopic colonies in soft agar and induce tumors in nude mice, indicating that AML1 can be a transforming gene when overexpressed in fibroblasts. Both the runt homology domain and the transactivational domain were required to transform NIH3T3 cells. By analysis of deletion mutants, it was shown that an element determining the transactivational potency exists between amino acids 288 and 396 within the region downstream of the runt homology domain. Furthermore, we demonstrated that this region was also required for fibroblast transformation, indicating that the transforming activity of AML1 is correlated with the transactivational potencies. These results suggest a role of AML1 in the regulation of cellular proliferation, as well as myeloid cell differentiation.