The (1122) chromosomal traosiocatioa foand in Ewing’s sarcoma and related tumors loses the amino terminas of the EWS protein to the DNA-binding domain of the FLI-1 transcription factor. In cootrast to normal FU-l, the EWS/FU-l fusion transforms N1H3T3 cells and this activity requires both EWS and FU-l sequences. Reporter gene assays showed that the portion of EWS fosed to FU-l encodes a strong transcriptional activation domain. To determine whether this function is necessary for transformation by EW S/FU-l, deletion analysis of EWS was performed. We found that the EWS domain could be functionally subdivided into two regions:(i) an amino terminal domain (domain A) which transforms efficiently when fused to FLl-l but baa little transactiration activity in a model system and (ii) a distal region (domain B) which transactivates efficiently bat transforms less efficiently when limed to FU-L Replacement of the EWS domain with known heterologons transcriptional activation domains yielded chi meric FU-l fusions that in some instances coaid transform NIH3T3 cells. Finally we demonstrate that EWS/FLI-1 and related FU-l chimeras are able to cooperate with another transcription factor to activate a model reporter gene. These results further demonstrate that EWS/FU-l is an aberrant transcription factor and suggest that the EWS domain mediates important protein-protein interactions with other factors resulting in the transcriptional modulation of target genes.