The c-fms proto-oncogene encodes a transmembrane glycoprotein that is probably identical to the receptor for the macrophage colony stimulating factor, CSF-1. Forty C-terminal amino acids of the normal receptor are replaced by 11 unrelated residues in the feline v-fms oncogene product, deleting a C-terminal tyrosine residue (Tyr969) whose phosphorylation might negatively regulate the receptor kinase activity. We show that the human c-fms gene stimulates growth of mouse NIH 3T3 cells in agar in response to human recombinant CSF-1, indicating that receptor transduction is sufficient to induce a CSF-1 responsive phenotype. Although cells transfected with c-fms genes containing either Tyr969 or Phe969 were not transformed, cotransfection of these genes with CSF-1 complementary DNA induced transformation, with c-fms(Phe969) showing significantly more activity than c-fms(Tyr969). In the absence of CSF-1, chimaeric v-fms/c-fms genes encoding the wild-type c-fms C terminus were poorly transforming, whereas chimaeras bearing Phe969 were as transforming as v-fms. Thus, the Phe969 mutation, although not in itself sufficient to induce transformation, activates the oncogenic potential of c-fms in association with an endogenous ligand or in conjunction with mutations elsewhere in the c-fms gene that confer ligand-independent signals for growth.