WT1 was originally identified as an inactivated gene in Wilms tumor, a childhood kidney cancer. Alternative splicing of the WT1 transcript generates four major protein isoforms, each having different functional properties. Here we characterized a short transcript originating from a second promoter located within intron 1 of WT1. This 2.3-kb sWT1 transcript encodes a protein of approximately 35-37 kDa that retains intact DNA-binding and transactivation domains but lacks the 147 amino acids at the N terminus required for transcriptional repression. We found sWT1 to be a more potent transcriptional activator than WT1 for cyclin E and insulin-like growth factor 1 receptor promoters, which are normally repressed by WT1. The expression patterns of the sWT1 and WT1 transcripts differed slightly in various organs; we found sWT1 protein in tissue samples from adult testis and fetal kidney, with low-level expression in adult kidney as well. The sWT1 transcript, but not the full-length transcript, was over-expressed in the leukemia samples tested. sWT1-specific small interfering RNA retarded the proliferation of leukemia cell line K562 in vitro. Finally, sWT1 cooperated with Ras in transforming primary fibroblasts in vitro. Further studies are needed to clarify the oncogenic behavior of this isoform and to determine the mechanism underlying its up-regulation in leukemia and other forms of cancer.