The Notch genes of Drosophila melanogaster and vertebrates encode transmembrane receptors that help determine cell fate during development. Although ligands for Notch proteins have been identified, the signaling cascade downstream of the receptors remains poorly understood. In human acute lymphoblastic T-cell leukemia, a chromosomal translocation damages the NOTCH1 gene. The damage apparently gives rise to a constitutively activated version of NOTCH protein. Here we show that a truncated version of NOTCH1 protein resembling that found in the leukemic cells can transform rat kidney cells in vitro. The transformation required cooperation with the E1A oncogene of adenovirus. The transforming version of NOTCH protein was located in the nucleus. In contrast, neither wild-type NOTCH protein nor a form of the truncated protein permanently anchored to the plasma membrane produced transformation in vitro. We conclude that constitutive activation of NOTCH similar to that found in human leukemia can contribute to neoplastic transformation. Transformation may require that the NOTCH protein be translocated to the nucleus. These results sustain a current view of how Notch transduces a signal from the surface of the cell to the nucleus.