Isolated restriction endonuclease fragments of the herpes simplex virus type 1 (HSV-1) genome were introduced into hamster embryo cells to identify DNA sequences capable to transforming the cells with respect to acquisition of properties correlated with tumorigenicity. One of the fragments generated by cleavage of HSV-1 DNA with the restriction endonuclease Xba I was found to induce transformation at a frequency of about 10 colonies per quantity of fragment recovered from 1 microgram of uncut DNA; fractions containing the other Xba I fragments failed to induce transformation reproducibly, although occasional colonies were detected. The fragment with transforming activity (Xba I-F) is 15.5 X 10(6) daltons in molecular weight and is located between 0.30 and 0.45 map units on the HSV-1 genome. The Xba I-F transformants obtained were selected for their ability to replicate in low concentrations of serum; in addition, they were found to attain high saturation densities in the presence of 10% serum and to form colonies in semisolid medium. Moreover, the transformed cells produced at least one of the viral gene products (a membrane glycoprotein) encoded in the fragment used for transformation, indicating not only that viral DNA was incorporated into the cells, but also that viral genes were expressed.