Middle tumor antigen (MT) is the primary transforming protein of murine Polyomavirus. MT transforms by associating with and modulating the activities of cellular proteins involved in control of cell proliferation. MT binds to and is phosphorylated by cellular tyrosine kinases. The phosphorylated tyrosines become docking sites for SH2 (Src homology 2) domain-containing molecules. Tyrosine 322 of MT is known to be phosphorylated but has no known binding protein. We have found that phospholipase C-gamma 1 (PLC-gamma 1), a SH2 domain-containing protein, coimmunoprecipitates with MT. Tyrosine phosphorylation of PLC-gamma 1 is elevated in cells expressing MT, suggesting activation of this enzyme by MT. A Tyr-322-->Phe mutation in MT renders it defective in MT-PLC-gamma 1 interaction and in transformation. From the correlation between transformation and MT-PLC-gamma 1 interaction, we suggest that PLC-gamma 1 may play a role in transformation.