The specific chromosomal translocation t(X;1)(p11.2;q21.2) has been observed in human papillary renal cell carcinomas. In this study we demonstrated that this translocation results in the fusion of a novel gene designated PRCC at 1q21.2 to the TFE3 gene at Xp11.2. TFE3 encodes a member of the basic helix-loop-helix (bHLH) family of transcription factors originally identified by its ability to bind to microE3 elements in the immunoglobin heavy chain intronic enhancer. The translocation is predicted to result in the fusion of the N-terminal region of the PRCC protein, which includes a proline-rich domain, to the entire TFE3 protein. Notably the generation of the chimaeric PRCC-TFE3 gene appears to be accompanied by complete loss of normal TFE3 transcripts. This work establishes that the disruption of transcriptional control by chromosomal translocation is important in the development of kidney carcinoma in addition to its previously established role in the aetiology of sarcomas and leukaemias.