The c-fgr proto-oncogene specifies a nonreceptor protein-tyrosine kinase, p55c-fgr, a member of the src family. In the present study, we have mutagenized c-fgr to mimic alterations found at the 3' end of the v-fgr oncogene and have investigated the biologic effects of normal and mutant p55c-fgr expression. Genes lacking 10 or 13 codons at the 3' end, as well as a gene encoding phenylalanine instead of tyrosine at codon 523, were potent oncogenes when transfected into NIH 3T3 cells. Specific enzymatic activities of the more highly transforming gene products were 3-4-fold greater than that of p55c-fgr. In vivo, the amount of tyrosine phosphorylation of cellular proteins was directly proportional to potency in focus-forming assays. These findings are the first to identify highly transforming mutations of the c-fgr proto-oncogene. The proto-oncogene was also active in transforming assays, demonstrably greater than that of a kinase-deficient mutant. Foci arising in c-fgr-transfected cultures expressed abundant enzyme that was normal by a number of criteria. In addition, growth rates for cells expressing p55c-fgr were restricted, as compared with cells expressing a kinase-deficient protein or cells transformed by proteins with high specific enzymatic activities. Thus, enzymatically active p55c-fgr can simultaneously activate transforming and growth inhibitory pathways.