We have isolated a replication-defective rapidly transforming sarcoma virus (designated 16L virus) from a fibro-sarcoma in a chicken infected with td107A, a transformation-defective deletion mutant of subgroup A Schmidt-Ruppin Rous sarcoma virus. 16L virus transforms fibroblasts and causes sarcomas in infected chickens within 2 wk. Its genomic RNA is 6.0 kilobases and contains sequences homologous to the transforming gene (fps) of Fujinami sarcoma virus (FSV). RNase T1 oligonucleotide analysis shows that the 5' and 3' terminal sequences of 16L virus are indistinguishable from (and presumably derived from) td107A RNA. The central part of 16L viral RNA consists of fps-related sequences. These oligonucleotides fall into four classes: (i) oligonucleotides common to the putative transforming regions of FSV and another fps-containing avian sarcoma virus, UR1; (ii) an oligonucleotide also present in FSV but not in UR1; (iii) an oligonucleotide also present in UR1 but not in FSV; and (iv) an oligonucleotide not present in either FSV, UR1, or td107A. Cells infected with 16L virus synthesize a protein of Mr 142,000 that is immunoprecipitated with anti-gag antiserum. This protein has protein kinase activity. These results suggest that 16L virus arose by recombination between td107A and the cellular fps gene.