We have previously reported that the Huntingtin interacting protein 1 (HIP1) gene is fused to the platelet-derived growth factor beta receptor (PDGFbetaR) gene in a patient with chronic myelomonocytic leukemia. We now show that HIP1/PDGFbetaR oligomerizes, is constitutively tyrosine-phosphorylated, and transforms the murine hematopoietic cell line, Ba/F3, to interleukin-3-independent growth. A kinase-inactive mutant is neither tyrosine-phosphorylated nor able to transform Ba/F3 cells. Oligomerization and kinase activation required the 55-amino acid carboxyl-terminal TALIN homology region but not the leucine zipper domain. Tyrosine phosphorylation of a 130-kDa protein and STAT5 correlates with transformation in cells expressing HIP1/PDGFbetaR and related mutants. A deletion mutant fusion protein that contains only the TALIN homology region of HIP1 fused to PDGFbetaR is incapable of transforming Ba/F3 cells and does not tyrosine-phosphorylate p130 or STAT5, although it is itself constitutively tyrosine-phosphorylated. We have also analyzed cells expressing Tyr --> Phe mutants of HIP1/PDGFbetaR in the known PDGFbetaR SH2 docking sites and report that none of these sites are necessary for STAT5 activation, p130 phosphorylation, or Ba/F3 transformation. The correlation of factor-independent growth of hematopoietic cells with p130 and STAT5 phosphorylation/activation in both the HIP1/PDGFbetaR Tyr --> Phe and deletion mutational variants suggests that both STAT5 and p130 are important for transformation mediated by HIP1/PDGFbetaR.