A small retroviral vector carrying an oncogenic myc allele was isolated as a spontaneous variant (MH2E21) of avian oncovirus MH2. The MH2E21 genome, measuring only 2.3 kilobases, can be replicated like larger retroviral genomes and hence contains all cis-acting sequence elements essential for encapsidation and reverse transcription of retroviral RNA or for integration and transcription of proviral DNA. The MH2E21 genome contains 5' and 3' noncoding retroviral vector elements and a coding region comprising the first six codons of the viral gag gene and 417 v-myc codons. The gag-myc junction corresponds precisely to the presumed splice junction on subgenomic MH2 v-myc mRNA, the possible origin of MH2E21. Among the v-myc codons, the first 5 are derived from the noncoding 5' terminus of the second c-myc exon, and 412 codons correspond to the c-myc coding region. The predicted sequence of the MH2E21 protein product differs from that of the chicken c-myc protein by 11 additional amino-terminal residues and by 25 amino acid substitutions and a deletion of 4 residues within the shared domains. To investigate the functional significance of these structural changes, the MH2E21 genome was modified in vitro. The gag translational initiation codon was inactivated by oligonucleotide-directed mutagenesis. Furthermore, all but two of the missense mutations were reverted, and the deleted sequences were restored by replacing most of the MH2E21 v-myc allele by the corresponding segment of the CMII v-myc allele which is isogenic to c-myc in that region. The remaining two mutations have not been found in the v-myc alleles of avian oncoviruses MC29, CMII, and OK10. Like MH2 and MH2E21, modified MH2E21 (MH2E21m1c1) transforms avian embryo cells. Like c-myc, it encodes a 416-amino-acid protein initiated at the myc translational initiation codon. We conclude that neither major structural changes, such as in-frame fusion with virion genes or internal deletions, nor specific, if any, missense mutations of the c-myc coding region are necessary for activation of the basic oncogenic function of transduced myc alleles.