A novel type of RET rearrangement, PTC5, was detected in papillary thyroid carcinomas of two patients exposed to radioactive fallout after Chernobyl. Reverse transcription-PCR and rapid amplification of 5'-cDNA ends revealed a fusion of the ret tyrosine kinase (TK) domain with a sequence identical to that described previously as ret-II. Ret-II is a transfection artifact in NIH3T3 cells and has not yet been detected in any human tumor. Overlapping sequences found in the expressed sequence tag databases enabled us to sequence the COOH terminus of the ret-fused gene 5 (RFG5). The combined data made it possible to assemble a full-length rfg5 protein sequence. Computer-assisted analysis of this sequence reveals four putative coiled-coil structures, possibly involved in dimerization, but no membrane-binding sequences. Northern blots show a ubiquitous RFG5 expression in various normal tissues, including the thyroid gland. In addition to the RFG5/RET, we also detected the reciprocal RET/RFG5 transcript in both tumor samples, suggesting that the rearrangement is based on a balanced reciprocal translocation. In agreement with other rearranged TKs, it is concluded that the transforming action of the new fusion protein rfg5/ret in thyroid tumors may be due to an activation of the ret TK by constitutive expression and dimerization potential of the 5'-fused rfg5 protein. Ret immunohistochemistry indicates that the fusion protein is expressed in all cells of PTC5 tumors, suggesting that RFG5/RET rearrangement is an early event in thyroid carcinogenesis.