Compared with normal erbB-2 gp185, mutant erbB-2 proteins generated by mutations either in the transmembrane domain or by NH2-terminal deletion are able to transform NIH 3T3 cells at a 10- to 100-fold greater efficiency. Mutant proteins of both classes show increased tyrosine kinase activity, suggesting that an abnormal level of receptor-associated tyrosine kinase activity is a major determinant of erbB-2 oncogenic potential.