Two viruses are under investigation: A) the src oncogene-containing Rous Sarcoma Virus (RSV) and B) the myc oncogene-containing Mill Hill 2 virus (MH2). A) Studies during the past year have revealed that RSV has the capacity to transform hematopoietic cells of the erythroid lineage. This effect could be seen both in vitro and in vivo, and the type of transformation observed has also been shown to be distinct from that induced by the erb oncogene-containing avian erythroblastosis virus (AEV) in the following ways: l) Erythroid cell colonies in vitro induced by RSV have a distinctive morphology, 2) Isolated cell colonies require additional factors for growth in liquid medium, and 3) RSV-transformed cultures contained populations of spontaneously differentiating cells indicating that the cells possess the dual potential to simultaneously self renew and differentiate. Cells transformed by a temperature-sensitive RSV could be induced to differentiate by incubating cultures at the nonpermissive temperature for 4 days. That the pp60src protein is expressed in the cells was demonstrated by a kinase assay. These results indicate that RSV can alter the pattern of erythroid differentiation in a manner similar to, but distinct from AEV. These results also show that the tyrosine-specific kinase encoded by RSV can transform erythroid cells and that the src and erb B proteins may share a similar functional homology, i.e., that the erb B protein also functions as a tyrosine kinase. B) One mutant, which is temperature sensitive for the maintenance of macrophage transformation, has been isolated from a mutagenized stock of MH2 virus. Approximately 400 cell clones were screened during the isolation procedure. Cells shifted to the nonpermissive temperature for 5-7 days differentiated into adherent macrophages in contrast to wild type-transformed cells. The onset of leukemia and death are both delayed relative to wild type MH2 in birds infected with the mutant virus. These findings demonstrate that a virus gene product must be continually expressed for the cells to remain leukemic and that they will undergo a normal-like differentiation once the transforming activity of the virus has been inactivated.