We recently reported the cloning of a rearranged human oncogene following transfection of DNA from Kaposi's sarcoma into NIH 3T3 cells. To identify the protein(s) encoded in two novel mRNAs of 3.5 and 1.2 kb expressed in NIH 3T3 transformants, we constructed a cDNA library. One of the cDNA clones isolated (KS3) corresponded to the 1.2 kb mRNA and transformed NIH 3T3 cell when inserted into a mammalian expression vector. The 1152 nucleotide KS3 cDNA encodes a protein of 206 amino acids with significant homology to the growth factors basic FGF and acidic FGF. Expression of the KS3 product as a bacterial fusion protein or in COS cells allowed us to determine that both proteins had significant growth-promoting activity and that the COS cell protein was glycosylated. Thus one of the mRNAs transcribed from the KS oncogene encodes a growth factor that could transform cells by an autocrine mechanism and appears to represent a new member of the FGF family.