Local degradation of extracellular fibronectin, a major extracellular adhesive protein, is believed to play an important part in the migration of cells through the extracellular matrix during tumour invasion, morphogenetic movement and trophoblast implantation. Fibronectin is lost from the cell surface after transformation with Rous sarcoma virus (RSV). By using fluorescent and radiolabelled probes covalently coupled to the surface of substrata, we have recently identified a proteolytic activity that is expressed in RSV-transformed cells and is involved in the local degradation of fibronectin at cell-substratum contact sites. Here, we extend the relevance of these findings and gain some insight into the cellular functions of pp60src, the transforming gene product of RSV. We show that newly expressed viral pp60src is localized at the cytoplasmic surface of the cell membrane, corresponding to the cell contact sites where degradation of extracellular fibronectin occurs.