The 5' half of the EWS gene has recently been described to be fused to the 3' regions of genes encoding the DNA-binding domain of several transcriptional regulators, including ATF1, FLI-1, and ERG, in several human tumors. The most frequent occurrence of this situation results from the t(11;22)(q24;q12) chromosome translocation specific for Ewing sarcoma (ES) and related tumors which joins EWS sequences to the 3' half of FLI-1, which encodes a member of the Ets family of transcriptional regulators. We show here that this chimeric gene encodes an EWS-FLI-1 nuclear protein which binds DNA with the same sequence specificity as the wild-type parental FLI-1 protein. We further show that EWS-FLI-1 is an efficient sequence-specific transcriptional activator of model promoters containing FLI-1 (Ets)-binding sites, a property which is strictly dependent on the presence of its EWS domain. Comparison of the properties of the N-terminal activation domain of FLI-1 to those of the EWS domain of the fusion protein indicates that EWS-FLI-1 has altered transcriptional activation properties compared with FLI-1. These results suggest that EWS-FLI-1 contributes to the transformed phenotype of ES tumor cells by inducing the deregulated and/or unscheduled activation of genes normally responsive to FLI-1 or to other close members of the Ets family. ES and related tumors are characterized by an elevated level of c-myc expression. We show that EWS-FLI-1 is a transactivator of the c-myc promoter, suggesting that upregulation of c-myc expression is under control of EWS-FLI-1.