The ost protooncogene encodes a guanine nucleotide exchange factor for the Rho family of small GTPases, RhoA and Cdc42. The N-terminal domain of Ost (Ost-N) appears to negatively regulate the oncogenic activity of the protein, as deletion of this domain drastically increases its transforming activity in NIH 3T3 cells. Using a yeast two-hybrid system, we identified five genes encoding proteins that can interact with Ost-N. One of them, designated OSTIP2 (Ost interacting protein 2), encoded a previously uncharacterized protein. The OSTIP2 product is highly expressed in skeletal muscle as a 1.2-kb transcript. Full-length OSTIP2 cDNA contained an ORF of 193 amino acids. Transcription-coupled translation of OSTIP2 cDNA in reticulocyte lysates revealed a protein product of 20 kDa, which corresponded to the predicted size of the protein. Bacterially expressed glutathione S-transferase (GST)-Ostip2 fusion protein efficiently associated in vitro with baculovirus-expressed Ost. Interestingly, expression of Ostip2 in NIH 3T3 cells efficiently induced foci of morphologically transformed cells. Moreover, inoculation of athymic (nude) mice with OSTIP2 transfectants strongly induced tumor formation. These results suggest that Ostip2 is a novel oncoprotein that can interact with the Rho exchange factor Ost.