The avian carcinoma virus MC29 (MC29V) contains a sequence of approximately 1,500 nucleotides which may represent a gene responsible for tumorigenesis by MC29V. We present evidence that MC29V has acquired this nucleotide sequence from the DNA of its host. The host sequence which has been incorporated by MC29V is transcribed into RNA in uninfected chicken cells and thus probably encodes a cellular gene. We have prepared radioactive DNA complementary to the putative MC29V transforming gene (cDNA(mc) (29)) and have found that sequences homologous to cDNA(mc) (29) are present in the genomes of several uninfected vertebrate species. The DNA of chicken, the natural host for MC29V, contains at least 90% of the sequences represented by cDNA(mc) (29). DNAs from other animals show significant but decreasing amounts of complementarity to cDNA(mc) (29) in accordance with their evolutionary divergence from chickens; the thermal stabilities of duplexes formed between cDNA(mc) (29) and avian DNAs also reflect phylogenetic divergence. Sequences complementary to cDNA(mc) (29) are transcribed into approximately 10 copies per cell of polyadenylated RNA in uninfected chicken fibroblasts. Thus, the vertebrate homolog of cDNA(mc) (29) may be a gene which has been conserved throughout vertebrate evolution and which served as a progenitor for the putative transforming gene of MC29V. Recent experiments suggest that the putative transforming gene of avian erythroblastosis virus, like that of MC29V, may have arisen by incorporation of a host gene (Stehelin et al., personal communication). These findings for avian erythroblastosis virus and MC29V closely parallel previous results, suggesting a host origin for src (D. H. Spector, B. Baker, H. E. Varmus, and J. M. Bishop, Cell 13:381-386, 1978; D. H. Spector, K. Smith, T. Padgett, P. McCombe, D. Roulland-Dussoix, C. Moscovici, H. E. Varmus, and J. M. Bishop, Cell 13:371-379, 1978; D. H. Spector, H. E. Varmus, and J. M. Bishop, Proc. Natl. Acad. Sci. U.S.A. 75:4102-4106, 1978; D. Stehelin, H. E. Varmus, J. M. Bishop, and P. K. Vogt, Nature [London] 260:170-173, 1976), the gene responsible for tumorigenesis by avian sarcoma virus. Avian sarcoma virus, avian erythroblastosis virus, and MC29V, however, induce distinctly different spectra of tumors within their host. The putative transforming genes of these viruses share no detectable homology, although sequences homologous to all three types of putative transforming genes occur and are highly conserved in the genomes of several vertebrate species. These data suggest that evolution of oncogenic retroviruses has frequently involved a mechanism whereby incorporation and perhaps modification of different host genes provides each virus with the ability to induce its characteristic tumors.