Chicken DNA segments homologous to the ets region from the transforming gene of avian erythroblastosis virus, E26, were molecularly cloned and shown to be almost identical to v-ets by sequence analysis. The transforming gene acids from two cell-derived sequences, myb and ets. Whereas the mammalian ets genes are present on two chromosomes, the chicken ets sequence is present as a single locus with v-ets homologous sequences found in nine regions over about 60 kb of genomic DNA. The major sequence difference between the v-ets and c-ets is found at the 3' end, resulting in different carboxy termini of p135 and the chicken proto-ets product. The chicken locus is primarily expressed in normal thymus cells as a 7.5-kb mRNA. The first two viral homologous regions are not found in this c-ets transcript or any other minor species, suggesting that they may not be true exons. Thus, the v-ets region of E26 demonstrates that two major structural differences may have occurred during the transduction of proto-ets sequences by the virus: (1) Truncation of sequences present at the 5' and 3' ends of the gene; and (2) Acquisition of noncoding proto-ets sequences into the virus. Either or both of these differences may be, in part, responsible for the oncogenic potential of this retrovirus.