Jaagsiekte sheep retrovirus (JSRV) is an exogenous retrovirus of sheep that induces a contagious lung cancer, ovine pulmonary adenocarcinoma. We previously showed that the gene encoding JSRV envelope protein (Env) appears to function as an oncogene, since it can transform mouse NIH 3T3 cells. The cytoplasmic tail of the Env transmembrane protein (TM) is necessary for the transformation. However, previous experiments did not exclude the involvement of the Env surface protein (SU) in transformation. In this study, we created a series of nested deletion mutants through the SU domain and assessed their ability to transform rodent fibroblasts. All SU deletion mutants downstream of the predicted signal peptide were unable to transform murine NIH 3T3 or rat 208F cells. Transport to the plasma membrane of selected deleted Env proteins was confirmed by confocal immunofluorescence microscopy of hemagglutinin-tagged versions. Additional sequential SU deletion mutants lacking 50-amino-acid (aa) blocks throughout SU also were unable to transform. Furthermore, minimal insertion mutants of two amino acids (Leu/Gln) at various positions in SU also abolished transformation. These data indicate that domains in SU facilitate efficient JSRV transformation. This could reflect a necessity of SU for appropriate configuration of the Env protein or independent activation by SU of a signaling pathway necessary for transformation. Complementation between SU and TM mutants for transformation supported the latter hypothesis. Cotransfection with DeltaGP Y590F (mutant in the TM cytoplasmic tail) with DeltaGP SUDelta103-352 (lacking most of SU) resulted in efficient transformation. The resulting transformants showed evidence for the presence and expression of both mutant plasmids.