By ectopic expression of cDNAs derived from a Ewing sarcoma cell line in NIH3T3 cells, we isolated a transforming gene (est). Sequence analysis revealed homology to the cot oncogene, which encodes a novel serine kinase. Whereas the cot product was truncated at its carboxy-terminal end as a result of gene rearrangement during transfection, est encodes the normal cot product. Thus, this gene can be activated as an oncogene by overexpression as well as by gene rearrangement. NIH3T3 cells transfected with est formed progressively growing colonies in soft agar and were tumorigenic in nude mice. The 3.2-kb est transcript was expressed at low level in both human fibroblasts and epithelial cells. Addition of the tumor promoter, okadaic acid (OA), or cytokine, interleukin 1 (IL-1), but not serum or platelet-derived growth factor (PDGF), induced increased expression of the est transcript. Using fluorescence in situ hybridization, we localized the est gene to the short arm of human chromosome 10 at band p11.2.