Oligonucleotide-directed, site-specific mutagenesis is used to dissect the biochemical basis of oncogenic activation and of enzymatic activity of the ras oncogene. Studies are directed toward an understanding of the interrelationship between the known properties of the ras gene product. Mutagenesis of the ras oncogene in specific regions of the protein has been designed to explore the active center which is believed to be responsible for these properties. We have constructed several point mutations at the GTP binding site of p21. Both lysine and tyrosine mutations of asparagine-116 abolish GTP binding and transforming activities of p21. These activities are retained by mutations at the 117 or 118 position. Both 116 mutant p21s, when overproduced in E. coli, are apparently devoid of GTP binding and autokinase activities. These mutant DNAs do not transform NIH3T3 cells in a focus-forming assay, and cells that are transfected with 116 mutants incorporate the exogenous v-ras sequences, express p21, and are contact-inhibited. In contrast to competent clones, defective p21 proteins are not autophosphorylated in vivo, indicating loss of biochemical activity. Mutations of the glycine residues within the ATP/GTP-binding consensus sequences, GXXXXGK, also greatly affected the GTP binding activity. These studies indicate that the GTP binding domain of p21 is crucial for its cellular function.