The transforming potential and oncogenicity of a simian virus 40 (SV40) mutant affecting T-antigen (T-ag), SV40(cT)-3, was examined in an effort to dissect T-ag functions in transformation. SV40(cT)-3 has a point mutation at nucleotide 4434 that abolishes the transport of T-ag to the nucleus but does not affect its association with the cell surface. Transfection-transformation assays were performed with primary cells and established cell lines of mouse and rat origin. The efficiency of transformation for established cell lines by SV40(cT)-3 was comparable to that of wild-type SV40, indicating that transformation of established cell lines can occur in the absence of detectable amounts of nuclear T-ag. Transformation of primary mouse embryo fibroblasts by SV40(cT)-3 was markedly influenced by culture conditions; the relative transforming frequency was dramatically reduced in assays involving focus formation in low serum concentrations or anchorage-independent growth. Immunofluorescence tests revealed that the transformed mouse embryo fibroblasts partially transport the mutant cT-ag to the cell nucleus. Transformed cell lines induced by SV40(cT)-3 did not differ in growth properties from wild-type transformants. SV40(cT)-3 was completely defective for the transformation of primary baby rat kidney cells, a primary cell type unable to transport the mutant T-ag to the nucleus. The intracellular localization of cellular protein p53 was found to mimic T-ag distribution in all the transformants analyzed. The mutant virus was weakly oncogenic in vivo: the induction of tumors in newborn hamsters by SV40(cT)-3 was reduced in incidence and delayed in appearance in comparison to wild-type SV40. These observations suggest that cellular transformation is regulated by both nuclear and surface-associated forms of SV40 T-ag.