We isolated and sequenced a 3727 bp clone of the c-rel proto-oncogene from a chicken embryo fibroblast (CEF) cDNA library. Sequence comparison to the retroviral oncogene v-rel showed conclusively that the v-rel protein is truncated at both the amino- and carboxy-termini as compared to the c-rel protein. In vitro transcription and translation of this clone yielded a 68,000 dalton polypeptide that co-migrated on SDS polyacrylamide gels with p68c-rel from avian spleen cells. We inserted this c-rel cDNA clone into an avian retroviral vector (pJD214c-rel), and over-expressed p68c-rel in CEF. Over-expression of p68c-rel did not induce morphological transformation of these cells. Unlike p59v-rel, which is a nuclear protein in CEF, indirect immunofluorescence showed that p68c-rel in JD214c-rel infected CEF is located exclusively in the cytoplasm of these cells, even though the sequence of p68c-rel showed that it contains a nuclear localizing sequence identical to the one previously identified in p59v-rel. Furthermore, the c-rel protein does contain a nuclear localizing sequence which can function in CEF since replacement of the v-rel nuclear localizing sequence with the homologous domain from c-rel resulted in a hybrid rel protein that was located in the nucleus in CEF. Mutant c-rel proteins, deleted of the carboxy-terminal sequences not present in p59v-rel, localized to the nucleus in CEF. Our results show that the carboxy-terminus of p68c-rel inhibits nuclear localization of the protein, and suggest that subcellular location may be a form of regulation of the activity of p68c-rel.