Alveolar soft part sarcoma (ASPS) is an unusual tumor with highly characteristic histopathology and ultrastructure, controversial histogenesis, and enigmatic clinical behavior. Recent cytogenetic studies have identified a recurrent der(17) due to a non-reciprocal t(X;17)(p11.2;q25) in this sarcoma. To define the interval containing the Xp11.2 break, we first performed FISH on ASPS cases using YAC probes for OATL1 (Xp11.23) and OATL2 (Xp11.21), and cosmid probes from the intervening genomic region. This localized the breakpoint to a 160 kb interval. The prime candidate within this previously fully sequenced region was TFE3, a transcription factor gene known to be fused to translocation partners on 1 and X in some papillary renal cell carcinomas. Southern blotting using a TFE3 genomic probe identified non-germline bands in several ASPS cases, consistent with rearrangement and possible fusion of TFE3 with a gene on 17q25. Amplification of the 5' portion of cDNAs containing the 3' portion of TFE3 in two different ASPS cases identified a novel sequence, designated ASPL, fused in-frame to TFE3 exon 4 (type 1 fusion) or exon 3 (type 2 fusion). Reverse transcriptase PCR using a forward primer from ASPL and a TFE3 exon 4 reverse primer detected an ASPL-TFE3 fusion transcript in all ASPS cases (12/12: 9 type 1, 3 type 2), establishing the utility of this assay in the diagnosis of ASPS. Using appropriate primers, the reciprocal fusion transcript, TFE3-ASPL, was detected in only one of 12 cases, consistent with the non-reciprocal nature of the translocation in most cases, and supporting ASPL-TFE3 as its oncogenically significant fusion product. ASPL maps to chromosome 17, is ubiquitously expressed, and matches numerous ESTs (Unigene cluster Hs.84128) but no named genes. The ASPL cDNA open reading frame encodes a predicted protein of 476 amino acids that contains within its carboxy-terminal portion of a UBX-like domain that shows significant similarity to predicted proteins of unknown function in several model organisms. The ASPL-TFE3 fusion replaces the N-terminal portion of TFE3 by the fused ASPL sequences, while retaining the TFE3 DNA-binding domain, implicating transcriptional deregulation in the pathogenesis of this tumor, consistent with the biology of several other translocation-associated sarcomas. Oncogene (2001) 20, 48 - 57.