Ewing's sarcoma is the least differentiated member of the peripheral primitive neuroectodermal (pPNET) tumor family. Chromosomal translocations involving the EWS gene and five different Ets family transcription factor genes create fusion genes encoding aberrant transcription factors and are implicated in the vast majority of Ewing's sarcoma cases. Here, NIH 3T3 fibroblasts were infected with control (tk-neo or RAS) and two different EWS/ETS-expressing retroviruses. In vitro studies of established polyclonal lines expressing the two EWS/ETS genes, either EWS/FLI1 or EWS/ETV1, showed induction of cytokeratin 15 gene expression. Both fusion genes also caused characteristic gross morphologic, histologic, and ultrastructural changes in NIH 3T3 cells when transformed cell lines were injected into CB-17-scid mice. Native NIH 3T3 cells with a spindled cell morphology were converted to polygonal cells with high nucleo-cytoplasmic ratios that continued to express abundant cytokeratin. Extracellular collagen deposition was abolished, rough endoplasmic reticulum was markedly diminished, and rudimentary cell-cell attachments appeared. Most strikingly, neurosecretory-type dense core granules like those seen in pPNET were now evident. This murine model, created in mesenchyme-derived NIH 3T3 cells, demonstrated new characteristics of both neuroectodermal and epithelial differentiation and resembled small round cell tumors microscopically.