An avian retrovirus containing only the v-mil oncogene was analyzed for its ability to induce a transformed phenotype in chicken embryo fibroblasts. Infected cultures exhibited an altered morphology, disarranged actin cable filaments, and a decrease in the amount of cell-surface fibronectin. In addition, these cells showed a high level of plasminogen activator protease activity and were also capable of growth under low serum conditions. In contrast, only small numbers of foci under agar and colonies in semisolid medium were induced by this virus relative to Mill Hill 2 and Rous sarcoma viruses. Forty percent of the birds inoculated in the wing web with v-mil-infected cells developed slow growing tumors at the site of injection; no evidence of leukemia was detected. Our results indicate that the v-mil oncogene is transforming both in vitro and in vivo, that v-mil is functionally related to its homologous murine counterpart v-raf, and that the v-mil and v-myc oncogenes in MH2 can independently transform fibroblasts.