The Finkel-Biskis-Reilly murine sarcoma virus (FBR-MuSV) is capable of inducing osteosarcomas in susceptible mice. This retrovirus transduced sequences derived from the transcription factor c-fos and from an unrelated mouse sequence called fox. Here, we describe the cloning and sequence analysis of human and mouse cellular cDNAs hybridizing to the fox sequence. The cloned cDNAs encode for a single ubiquitin-like (Fubi) protein fused in frame to S30, a protein of the small ribosomal subunit. Fubi conserved amino acid residues known to be involved in the ATP-dependent proteolytic activity of ubiquitin. Moreover, the fau gene is conserved in several species, while its mRNA is ubiquitously expressed in different mouse tissues. Surprisingly, FBR-MuSV transduced the complete but mutated open reading frame (ORF) in its reversed transcriptional orientation. This is the first report about a retrovirus in which an antisense sequence to a cellular gene, which we called fau (FBR-MuSV-associated ubiquitously expressed gene), is discovered. Rat-2 cells transfected with plasmids containing v-fau/fox recombinants of FBR-MuSV revealed a twofold increase of the transformation capacity of FBR-MuSV 'in vitro' because of the fau antisense sequence. Newly formed retropseudogenes were identified in three out of eight primary radiation-induced osteosarcomas. This high incidence of creating retropseudogenes in these 90Sr-induced bone tumours may contribute to the mechanism by which FBR-MuSV, originally isolated from such tumours, acquired the fau gene in its reverse orientation.