The two major forms of the c-abl gene differ from their activated counterpart, the v-abl oncogene of the Abelson murine leukemia virus by the replacement of their N-terminal sequences with viral gag sequences. Overexpression of p150c-abl type IV in a retroviral vector similar to Abelson virus does not transform NIH 3T3 fibroblasts, even though it is expressed and myristoylated at levels comparable to pp160v-abl. Members of a nested set of deletion mutations of the N-terminus of c-abl type IV in this expression system will activate abl to transform murine fibroblasts. The smallest of these deletions, delta XB, efficiently transforms lymphoid cells in vitro and causes leukemia in vivo demonstrating that gag sequences are not necessary for abl-induced leukemogenesis. The delta XB mutation defines an N-terminal regulatory domain, which shares a surprising homology with chicken oncogene v-crk and phospholipase C-II. Although overexpression of the myristoylated form of c-abl does not transform cells, it nonetheless has a profound effect on cell growth.