The c-fms proto-oncogene product is a transmembrane glycoprotein that is probably identical to the cell surface receptor for the mononuclear phagocyte colony stimulating factor, CSF-1. An analogous glycoprotein encoded by the viral oncogene v-fms includes the extracellular ligand-binding domain, membrane spanning segment, and cytoplasmic tyrosine kinase domain of the CSF-1 receptor. The v-fms and c-fms gene products differ significantly at their distal carboxylterminal ends where the truncated viral transforming protein has lost a single tyrosine residue (tyr969) that may negatively regulate the receptor kinase activity. Introduction of v-fms into a CSF-1 dependent murine macrophage cell line induced factor independence and tumorigenicity by a nonautocrine mechanism. Thus, although the v-fms gene product can bind CSF-1, its constitutive tyrosine-specific protein kinase provides growth stimulatory signals in the absence of ligand. Transfection of human c-fms cDNA into mouse NIH-3T3 cells conferred a CSF-1 responsive phenotype. Although neither the wild-type c-fms (tyr969) gene nor a mutant c-fms (phe969) allele induced transformation of NIH-3T3 cells, cotransfection with human CSF-1 cDNA gave rise to transformed foci. In cells cotransfected with the CSF-1 gene, the efficiency of focus formation induced by the mutant c-fms (phe969) gene was greater than that of the wild-type gene and equivalent to that of v-fms alone. A chimeric v-fms/c-fms molecule in which the carboxylterminus of the v-fms gene product was replaced by the corresponding region of the wild type c-fms (tyr969) was weakly transforming, whereas chimeric molecules containing phe969 transformed NIH-3T3 cells efficiently. Thus, complete oncogenic activation of the c-fms gene appears to require two events: one which alters a putative negative regulatory site of tyrosine phosphorylation, and a second which phenocopies a ligand-induced conformational change.