The EWS/FLI 1 fusion protein is created by the translocation between chromosomes 11 and 22 that appears io most Ewing's sarcomas. This chimeric protein has been demonstrated to be an aberrant transcription factor. Genes up regulated by EWS/FLI 1 but not by fulMengtb FL11 were identified by representational difference analysis (RDA). We bate characterized a novel gene, EWS/FLI1 activated transcript 2 (EAT-2) that was dotted from a murine cDNA library using a differentially expressed RDA fragment. EAT-2 expres sion is seen within 4-8 h of EWS/FLI 1 induction. Its expression correlates with transformation of NIH3T3 ceUs by chimeric proteins related to EWS/FLII but not by unrelated genes. EAT-2 is expressed in normal murine tissues and contains a unique but biochemically func tional SH2 domain. An homoiogoas sequence in the human genome has been identified aod mapped to chromosome lq22. Human EAT-2 transcripts were identified by reverse transcriptase-polymerase chain reaction (RT-PCR) in Ewing's sarcoma cell tumour cell lines. EAT-2’s unique structure and correlation with transformation make it a candidate for playing a role in the transformation of NIH3T3 cells and the oncogenesis of Ewing's sarcoma.