Avian leukosis viruses induce erythroblastosis in chicks by integrating into the c-erbB gene and thus activating c-erbB transcription. We characterized Rous-associated virus 1-induced leukemic erythroblasts in vitro and showed that they mostly resemble erythropoietin-independent but otherwise normal erythroid progenitors. Some leukemic cells, however, were able to both differentiate and proliferate extensively in vitro. All 14 leukemias studied expressed high levels of erbB-related proteins that were 5 to 10 kilodaltons larger but otherwise very similar to the gp74erbB protein of avian erythroblastosis virus ES4 with respect to biosynthesis, glycosylation, and cell surface expression. Two leukemias contained and released retroviruses that transduced erbB. Chicken embryo fibroblasts fully infected with these viruses expressed high levels of erbB RNA and protein but retained a normal phenotype. Our results suggest that certain forms of c-erbB, activated by long terminal repeat insertion or viral transduction, are capable of inducing erythroleukemia but unable to transform fibroblasts.