The structure and biology of cloned Moloney sarcoma provirus has been characterized. From cloned proviral subgenomic fragments, we have identified sequences required for efficient transformation and for generation of rescueable transforming virus. The retrovirus long terminal repeat (LTR) is required in addition to the acquired cellular sequence (mos) for efficient transformation. The LTR is also capable of activating the cellular homolog of viral mos. Cells transformed by subgenomic fragments containing an intact 5' end of the MSV LTR through c-mos contain a rescueable transforming virus. These findings led to the development of potential retrovirus vectors for activation and rescue of cellular sequence with transforming potential. Prototype retrovirus cloning vehicles based on MSV sequences have been successfully trested in model systems.