Molecular basis of the activation of the tumorigenic potential of Gag-insulin receptor chimeras. A previous study showed that the human insulin receptor (IR) could be activated by insertion of a 3' portion of the cDNA encoding the beta subunit into a retrovirus genome to form a Gag-IR fusion protein. While capable of transforming cells in culture, this IR cDNA-containing virus, called UIR, was not able to induce tumors in animals. Subsequently, we isolated a spontaneous sarcomagenic variant called UIR19t from the parental UIR. UIR19t was molecularly cloned, sequenced, and found to harbor two mutations. A 44-amino acid deletion immediately upstream from the transmembrane domain of the Gag-IR fusion protein removes all the extracellular sequence of the IR remaining in the original UIR construct. In addition, a single nucleotide deletion at the 3' end results in truncation and replacement of the carboxyl-terminal 12 amino acids by 4 new amino acids. The specific kinase activity of UIR19t is 4- to 5-fold higher than that of the parental UIR. However, no new cellular substrates were detected in UIR19t-transformed cells as compared to UIR cells. Viruses containing either the 5' or the 3' deletion mutation were constructed and assessed for their biological function. Our data indicate that the 5' deletion alone is sufficient to confer tumorigenic ability. We conclude that sequence immediately upstream from the transmembrane domain imposes a negative effect on the transforming and tumorigenic potential of the Gag-IR fusion protein. 