Although the human Ras proteins are members of a large superfamily of Ras-related proteins, to date, only the proteins encoded by the three mammalian ras genes have been found to possess oncogenic potential. Among the known Ras-related proteins, TC21/R-Ras2 exhibits the most significant amino acid identity (55%) to Ras proteins. We have generated mutant forms of TC21 that possess amino acid substitutions analogous to those that activate Ras oncogenic potential [designated TC21(22V) and TC21(71L)] and compared the biological properties of TC21 with those of Ras proteins in NIH 3T3 and Rat-1 transformation assays. Whereas wild-type TC21 did not show any transforming potential in vitro, both TC21(22V) and TC21(71L) displayed surprisingly potent transforming activities that were comparable to the strong transforming activity of oncogenic Ras proteins. Like Ras-transformed cells, NIH 3T3 cells expressing mutant TC21 proteins formed foci of morphologically transformed cells in monolayer cultures, proliferated in low serum, formed colonies in soft agar, and developed progressive tumors in nude mice. Thus, TC21 is the first Ras-related protein to exhibit potent transforming activity equivalent to that of Ras. Furthermore, mutant TC21 proteins also stimulated constitutive activation of mitogen-activated protein kinases as well as transcriptional activation from Ras-responsive promoter elements (Ets/AP-1 and NF-kappa B). We conclude that aberrant TC21 function may trigger cellular transformation via a signal transduction pathway similar to that of oncogenic Ras and suggest that deregulated TC21 activity may contribute significantly to human oncogenesis.