The t(3;21) (q26;q22) chromosomal translocation associated with blastic crisis of chronic myelogenous leukemia (CML) results in the formation of a chimeric protein fusing the amino-terminal DNA-binding domain encoded by the AML1 gene to the carboxyl-terminal-encoding portion of the Evi-1 gene. In order to evaluate transforming activity of this protein, AML1/Evi-1 was introduced into Rat1 fibroblasts. Cells expressing the fusion product formed macroscopic colonies in soft agar, indicating that AML1/Evi-1 is a transforming gene. It was also demonstrated that introduction of AML1/Evi-1 into the Rat1 clones harboring BCR/ABL also conferred enhanced capacity for anchorage independent growth. Analyses of deletion mutants of AML1/Evi-1 revealed that removal of the second zinc finger domain within the Evi-1 sequence totally abrogated the ability of AML1/Evi-1 to transform Rat1 cells. We showed that the transforming effect is correlated with the AP-1 activation induced by AML1/Evi-1. Furthermore, we demonstrated that c-jun is transcriptionally activated in Rat1 cells transformed by AML1/Evi-1, suggesting that c-jun expression is under control of AML1/Evi-1. These results indicate that the oncogenic effect of the t(3;21) translocation is caused by the generation of a chimeric transcriptional factor and that AML1/Evi-1 could perform a pivotal role in leukemic progression of CML.