The characteristic t(12;16)(q13;p11) chromosomal translocation, which leads to gene fusion that encodes the FUS-CHOP chimeric protein, is associated with human liposarcomas. The altered expression of FUS-CHOP has been implicated in a characteristic subgroup of human liposarcomas. We have introduced the FUS-CHOP transgene into the mouse genome in which the expression of the transgene is successfully driven by the elongation factor 1alpha (EF1alpha) promoter to all tissues. The consequent overexpression of FUS-CHOP results in most of the symptoms of human liposarcomas, including the presence of lipoblasts with round nuclei, accumulation of intracellular lipid, induction of adipocyte-specific genes and a concordant block in the differentiation program. We have demonstrated that liposarcomas in the FUS-CHOP transgenic mice express high levels of the adipocyte regulatory protein PPARgamma, whereas it is not expressed in embryonic fibroblasts from these animals following induction to differentiation toward the adipocyte lineage, indicating that the in vitro system does not really reflect the in vivo situation and the developmental defect is downstream of PPARgamma expression. No tumors of other tissues were found in these transgenic mice despite widespread activity of the EF1alpha promoter. This establishes FUS-CHOP overexpression as a key determinant of human liposarcomas and provide the first in vivo evidence for a link between a fusion gene created by a chromosomal translocation and a solid tumor.