The K-fgf/hst oncogene encodes a growth factor of the fibroblast growth factor (FGF) family and transforms cells through an autocrine mechanism which requires extracellular activation of its receptor(s). To identify the cell and tissue targets of K-fgf oncogenic potential in vivo, we constructed a recombinant retrovirus carrying the human K-fgf cDNA and injected it, together with helper Moloney murine leukemia virus, into immunocompetent as well as nude mice. The original construct was highly transforming in tissue culture but produced no detectable pathologies in vivo with the exception of a single fibrosarcoma which arose after a long latency. The virus produced by this tumor appears to have undergone a complex series of recombination events involving the helper Moloney murine leukemia virus. It encodes an Env/K-FGF fusion protein whose expression is under the control of a hybrid long terminal repeat. This virus (designated MFS, for meningeal fibrosarcoma) induces tumors in mice with high frequency and short latency. These neoplasms consist of aggressive fibrosarcomas of soft tissue as well as diffuse meningeal tumors originating from the dura mater that surround the whole central nervous system and cause severe hydrocephalus. The Env/K-FGF fusion protein expressed by the MFS virus has retained all of the biological properties of native K-FGF, including secretion, mitogenic activity, heparin binding, and neutralization by anti-K-FGF antibodies. These and other results indicate that the tumors induced by the MFS virus result from the oncogenic potential of K-FGF.