Jaagsiekte sheep retrovirus (JSRV) can induce rapid, multifocal lung cancer, but JSRV is a simple retrovirus having no known oncogenes. Here we show that the envelope (env) gene of JSRV has the unusual property that it can induce transformation in rat fibroblasts, and thus is likely to be responsible for oncogenesis in animals. Retrovirus entry into cells is mediated by Env interaction with particular cell-surface receptors, and we have used phenotypic screening of radiation hybrid cell lines to identify the candidate lung cancer tumor suppressor HYAL2͞LUCA2 as the receptor for JSRV. HYAL2 was previously described as a lysosomal hyaluronidase, but we show that HYAL2 is actually a glycosylphosphatidylinositol (GPI)-anchored cell-surface protein. Furthermore, we could not detect hyaluronidase activity associated with or secreted by cells expressing HYAL2, whereas we could easily detect such activity from cells expressing the related serum hyaluronidase HYAL1. Although the function of HYAL2 is currently unknown, other GPI-anchored proteins are involved in signal transduction, and some mediate mitogenic responses, suggesting a potential role of HYAL2 in JSRV Env-mediated oncogenesis. Lung cancer induced by JSRV closely resembles human bronchiolo-alveolar carcinoma, a disease that is increasing in frequency and now accounts for Ϸ25% of all lung cancer. The finding that JSRV env is oncogenic and the identification of HYAL2 as the JSRV receptor provide tools for further investigation of the mechanism of JSRV oncogenesis and its relationship to human bronchiolo-alveolar carcinoma.J aagsiekte sheep retrovirus (JSRV) is the causative agent of a contagious lung cancer of sheep called ovine pulmonary carcinoma or sheep pulmonary adenomatosis (1). Tumors originate from type II secretory alveolar and nonciliated bronchiolar epithelial cells, and late stages of the disease are accompanied by the secretion of copious lung fluid containing the virus. Purified virus induces multifocal tumors in as little as 10 days (2), suggesting the role of a viral oncogene. However, JSRV is a simple retrovirus with typical gag, pol, and env genes and no known oncogenes. The viral structural (Gag) and enzymatic (Pol) proteins are unlikely to be responsible, because they interact primarily with viral components, but there is precedent for alteration of cellular functions by the envelope (Env) protein of retroviruses, which interacts with cellular components to mediate virus entry. For example, the deleted Env protein of the Friend spleen focus-forming virus causes erythroleukemia by binding to and activating the erythropoietin receptor (3). If the JSRV Env protein was indeed oncogenic, identification of the host cell receptor for JSRV would provide key insights into the oncogenic mechanism of this highly pathogenic retrovirus. Furthermore, the contagious nature of JSRV and its ability to survive exposure to proteases and surfactants present in lung fluid suggest that vectors based on JSRV might be useful for gene therapy targeted to the lung, pr...