Expression of the src gene of Rous sarcoma virus in chicken embryo neuroretinal cells results in morphological transformation and sustained proliferation of this normally resting cell population. PA101 and PA104 are two mutants of Rous sarcoma virus which induce neuroretinal cell proliferation in the absence of morphological transformation. Their mitogenic property is temperature sensitive, and they both encode p60src proteins with low kinase activity. To study the role of the mitogenic function and protein kinase activity of p60src in tumorigenesis, we investigated the oncogenicity of PA101 and PA104. Both mutants were less tumorigenic than wild-type virus when injected into chicks. Tumorigenicity was further assayed by inoculating infected chicken embryo fibroblasts and neuroretinal cells onto the chorioallantoid membrane of embryonated duck eggs. This system provides a nonpermissive and immunodeficient environment for xenogenic cell grafting and allows the study of cell tumorigenicity within a temperature range of 37 to 39.5 degrees C. Chicken embryo fibroblasts and neuroretinal cells infected with PA101 were as tumorigenic as wild type-infected cells at 37 degrees C, but tumor development was significantly reduced at 39.5 degrees C. In contrast, both cell types infected with PA104 displayed sharply reduced tumorigenicity. Cell cultures derived from PA101 tumors induced on the chorioallantoid membrane were similar to the corresponding cells maintained in vitro in terms of morphology, production of plasminogen activator, relative amounts of phosphotyrosine in total cellular proteins, and phosphorylation of 34,000-molecular-weight protein. These results indicate that the expression of the mitogenic function of src does not account per se for cell tumorigenicity and that tumor formation is compatible with low levels of p60src protein kinase activity.