The FUS (TLS)-ERG chimeric protein associated with t(16;21)(p11;q22) acute myeloid leukemia is structurally similar to the Ewing's sarcoma chimeric transcription factor EWS-ERG. We found that both FUS-ERG and EWS-ERG could induce anchorage-independent proliferation of the mouse fibroblast cell line NIH 3T3. However, only FUS-ERG was able to inhibit the differentiation into neutrophils of a mouse myeloid precursor cell line L-G and induce its granulocyte colony-stimulating factor-dependent growth. We constructed several deletion mutants of FUS-ERG lacking a part of the N-terminal FUS region. A deletion mutant lacking the region between amino acids 1 and 173 (exons 1 to 5) lost the NIH 3T3-transforming activity but retained the L-G-transforming activity. On the other hand, a mutant lacking the region between amino acids 174 and 265 (exons 6 and 7) lost the L-G-transforming activity but retained the NIH 3T3-transforming activity. These results indicate that the N-terminal region of FUS contains two independent functional domains required for the NIH 3T3 and L-G transformation, which we named TR1 and TR2, respectively. Although EWS intrinsically possessed the TR2 domain, the EWS-ERG construct employed lacked the EWS sequence containing this domain. Since the TR2 domain is always found in chimeric proteins identified from t(16;21) leukemia patients but not in chimeric proteins from Ewing's sarcoma patients, it seems that the TR2 function is required only for the leukemogenic potential. In addition, we identified three cellular genes whose expression was altered by ectopic expression of FUS-ERG and found that these are regulated in either a TR1-dependent or a TR2-dependent manner. These results suggest that FUS-ERG may activate two independent oncogenic pathways during the leukemogenic process by modulating the expression of two different groups of genes simultaneously.