When injected into chickens, a transformation-defective mutant of the Prague C strain of Rous sarcoma virus induced tumors at low incidence and after a long latency. One such tumor released a replication-defective virus designated PR2257. We molecularly cloned and sequenced the proviral DNA from quail fibroblasts transformed by PR2257. Comparison of PR2257 sequence with that of Prague C, cellular src, and 3' adjacent cellular DNA showed that the spliced version of the c-src gene and about 950 base pairs (bp) of 3'-flanking cellular DNA were transduced into PR2257. This transduction eliminated nearly all replicative genes, since the gag gene splice donor site was linked to the splice acceptor site of the src gene and, on the 3' side, recombination occurred in the end of env gene. Insertion of two extra cytosines 23 bp before and 19 bp after the c-src stop codon resulted in an extension of the coding portion up to 587 amino acids, divergence of sequences after Pro-525 and replacement of Tyr-527 by a valine residue. In addition, it appears that the 5' and 3' untranslated regions of PR2257 result from multiple recombinations between exogenous and endogenous virus genomes. Limited digestion of p66src encoded by PR2257 with Staphylococcus aureus V8 protease yielded a V2 peptide (C-terminal moiety) with an apparent molecular mass of 31 kilodaltons, consistent with the 5.7-kilodalton increase expected from the DNA sequence. The structure of PR2257 suggests that the first step in the capture of c-src gene by avian lymphomatosis viruses is the trans splicing of the viral leader mRNA to exon 1 of c-src.