Besides erythroleukemias and sarcomas, avian erythroblastosis virus strain ES4 (AEV-ES4) induces renal adenocarcinomas (RCas) in chickens. To search for the cells of origin and the mechanism of the development of RCas, we investigated the RCas produced by td359AEV, a mutant of AEV-ES4 which lacks a leukemogenic effect, but which is sarcomagenic. Spindle cell sarcomas in various organs and RCas developed in a high number of chickens inoculated with td359AEV. RCas were tubulo-cystopapillary structures of basophilic cells and originated only from differentiated principal cells (PCs) of the renal collecting duct system. The origin of tumors from PCs was indicated by connections of tumor epithelium to segments of the collecting duct system, including connecting tubules and cortical and medullary collecting ducts. Tumor cells showed typical mucopolysaccharide-containing vacuoles which are characteristic of chicken PCs. Viral particles were observed throughout the kidney. Moreover, the highest numbers of particles as well as budding-images of them were seen (apart from tumor cells) in podocytes and distal tubule cells which did not undergo neoplastic change. The susceptibility of PCs to undergo neoplastic transformation could not be related to a particular activation state of the erbB gene, in view of the fact that cerbB expression was detected by in situ hybridization in the epithelium lining the Bowmann's capsule and the entire renal tubule system. From data of Northern blot and in situ hybridization techniques, it was suggested that the neoplastic transformation of PCs was elicited by overexpression of the v-erbB oncogene, a feature of tumor cells already detected in renal tubules lined by basophilic proliferating cells, the first stages of renal carcinogenesis induced by td359AEV. According to Southern blot analysis, td359AEV proviruses were randomly inserted in tumor DNAs and the RCas were polyclonal in nature.