Reticuloendotheliosis virus strain T (REV-T) is a highly oncogenic avian retrovirus that transforms early lymphoid cells in vivo and in vitro, but REV-T does not transform chicken embryo fibroblasts (CEF). Using antisera to p59v-rel, the v-rel oncogene product of REV-T, we show that p59v-rel is expressed at equal levels and is a phosphoprotein in REV-T infected spleen cells and CEF. Biochemical fractionation and immunofluorescence of REV-T infected nontransformed CEF show that p59v-rel is loosely associated with the nucleus. However, in REV-T transformed spleen cells p59v-rel is primarily a cytoplasmic protein. MSB-1 cells, a Marek's disease virus transformed T cell leukemic line, and E26 virus transformed myeloid cells show nuclear staining of p59v-rel when they are infected by REV-T. Our results indicate that there is a correlation between a cytoplasmic localization of p59v-rel and transformation by REV-T, and they suggest that p59v-rel cannot transform cells in which it assumes solely a nuclear location.