The c-fms gene encodes the receptor for the macrophage colony-stimulating factor, which plays a key role in the proliferation and differentiation of cells of the myelomonocytic lineage. In order to study the effects of overexpression of the macrophage colony-stimulating factor receptor in hematopoietic cells, a Harvey sarcoma virus-derived retroviral vector containing the murine c-fms cDNA was pseudotyped with Friend murine leukemia virus and inoculated into newborn DBA/2 mice. This viral complex induced monoclonal or oligoclonal leukemias with a shorter latency than that for Friend murine leukemia virus alone. Unexpectedly, 60% of the integrated fms proviruses had deletions at the 5 end of the c-fms gene. Sequence analysis of seven mutant proviruses indicated that the deletions always included the c-fms ligand binding domain and either occurred within the c-fms sequences, leaving the fms open reading frame unchanged, or joined VL30 sequences located at the 5 end of the parental retroviral vector to internal c-fms sequences, resulting in truncated fms proteins devoid of the canonical signal peptide. In contrast to all tyrosine kinase receptors transduced in retroviruses, no helper gag-or env-derived sequences were fused to the rearranged fms sequences. Viral supernatants isolated from hematopoietic tumors with viruses with deletions were able to transform NIH 3T3 cells as efficiently as parental fms virus, indicating that deletions resulted in constitutive activation of the c-fms gene. These oncogenic variants differ from those transduced in the Suzan McDonough strain of feline sarcoma viruses (L. Donner, L. A. Fedele, C. F. Garon, S. J. Anderson, and C. J. Sherr, J. Virol . 41:489-500, 1982). The high rate of c-fms rearrangement and its relevance in the occurrence of hematopoietic tumors are discussed.