Neoplastic transformation of fetal lamb kidney (FLK) cells by bovine leukemia virus (BLV) is reported. Morphological transformation was observed in FLK cells within a few weeks of BLV inoculation. BLV-transformed FLK cells had the following properties generally associated with viral transformation: (1) altered morphology; (2) increased growth rate; (3) colony formation in soft agar medium; (4) formation of large cell aggregates and growth in this aggregate form above an agar base; and (5) tumorigenicity in nude mice. The transformed cells contained BLV-specific p24 and gp51 antigens and were virus producers. BLV was detected in transformed cells by syncytial assay. The transformed cells yielded high-titered viral reverse transcriptase activity and viral particles. The transformed cells contained marker chromosomes (M1, M2, M3, M4 and M7) and a large submetacentric chromosome, but control cells did not. Thus, we demonstrated the neoplastic transformation of FLK cells by BLV.