We synthesized a gene for rat type alpha transforming growth factor (TGF-alpha) consisting of the leader sequence and the sequence coding for the mature 50-amino acid peptide without the C-terminal processed region. This gene was inserted into the retrovirus vector pSW272, which is derived from spleen necrosis virus, to obtain an infectious recombinant virus carrying the rat TGF-alpha gene. This recombinant virus can infect normal rat kidney (NRK) cells and allow these cells to grow in soft agar in the presence of TGF-beta. Transformed cells isolated from colonies grown in soft agar contain an integrated form of the recombinant virus and secrete biologically active TGF-alpha into their medium. These results show that a biologically active TGF-alpha can be produced by a gene synthesized from only part of the coding region and that the infectious retrovirus carrying the TGF-alpha gene (SW355) can function as a transforming agent in NRK cells in the presence of TGF-beta.