The c-abl proto-oncogene encodes a cytoplasmic tyrosine kinase which is homologous to the src gene product in its kinase domain and in the upstream kinase regulatory domains SH2 (src homology region 2) and SH3 (src homology region 3). The murine v-abl oncogene product has lost the SH3 domain as a consequence of N-terminal fusion of gag sequences. Deletion of the SH3 domain is sufficient to render the murine c-abl proto-oncogene product transforming when myristylated N-terminal membrane localization sequences are also present. In contrast, the human BCR/ABL oncogene of the Philadelphia chromosome translocation has an intact SH3 domain and its product is not myristylated at the N terminus. To analyze the contribution of BCR-encoded sequences to BCR/ABL-mediated transformation, the effects of a series of deletions and substitutions were assessed in fibroblast and hematopoietic-cell transformation assays. BCR first-exon sequences specifically potentiate transformation and tyrosine kinase activation when they are fused to the second exon of otherwise intact c-ABL. This suggests that BCR-encoded sequences specifically interfere with negative regulation of the ABL-encoded tyrosine kinase, which would represent a novel mechanism for the activation of nonreceptor tyrosine kinase-encoding proto-oncogenes.