The MTG8 (ETO) gene has been identified as the translocation partner of AML1 (PEBP2alphaB or CBFalpha2) gene in the AML1/MTG8 (ETO) fused gene caused by t(8;21) translocation in human acute myeloid leukaemia, M2 type. Although AML1/MTG8 chimaeric protein is known to inhibit the functioning of AML1 protein, the precise function of MTG8 gene itself is not known yet. We studied the significance of MTG8 gene in the oncogenicity of AML1/MTG8 fused gene, by introducing full-length MTG8 cDNA into both BALB/3T3 cells containing v-Ha-ras gene (Bhas 42 cells) and BALB/3T3 cells without v-Ha-ras gene. Irrespective of the overexpression of MTG8 gene in both groups of cells, Bhas-MTG8 clones which contained v-Ha-ras gene and expressed the MTG8 gene at a level more than twice that of parental Bhas 42 cells induced cell transformation, whereas BALB-MTG8 clones without v-Ha-ras gene did not. Furthermore, injection of the transformed Bhas-MTG8 clones into the subcutaneous tissue of nude mice induced tumours, whereas that of BALB-MTG8 clones did not. These results suggest that MTG8 gene product, in cooperation with viral Ras protein, resulted in tumour formation. We provide the first evidence that MTG8 gene by itself has a carcinogenic property within the AML1/MTG8 (ETO) fused gene.