The TEL/ARG oncogene is similar in structure to the TEL/ABL fusion found in human leukemia, however, we have demonstrated previously that the expression of TEL/ARG in Ba/F3 cells does not sustain strong activity of proliferation, whereas, that of TEL/ABL appeared to induce immediate cell proliferation. To study the molecular basis of the difference in the transforming activity of TEL/ARG and TEL/ABL, TEL/ARG mutants that swapped the kinase domain or C-terminus of ARG with the corresponding domain in ABL were generated, and each mutant was expressed in Ba/F3 cells. A TEL/ARG mutant containing the ABL kinase domain was similar to TEL/ARG in this study, but replacing the ARG C-terminal domain with that of ABL resulted in accelerated proliferation that was similar to that of TEL/ABL. When expressed in primary mouse bone marrow cells by retroviral transduction, spontaneous colony formation in methylcellulose culture was observed, in a fashion dependent on the C-terminal portion of ABL. These results indicate that distinct bio-phenotypes associated with these oncogenes are likely to be regulated by their C-termini, and the C-terminus of ARG contains a functional subdomain that impairs the growth signal induced by ABL family tyrosine kinase.