We have shown previously that the membrane association of the src proteins of recovered avian sarcoma viruses (rASVs) 1702 (56 kilodaltons) and 157 (62.5 kilodaltons), whose size variations occur within 8 kilodaltons of the amino terminus, is salt sensitive and that, in isotonic salt, these src proteins fractionate as soluble cytoplasmic proteins. In contrast, wild-type Rous sarcoma virus pp60src behaves as an integral plasma membrane protein in cellular fractionation studies and shows prominent membrane interaction by immunofluorescence microscopy. In this study we have examined the distribution of these size-variant src proteins between free and complexed forms, their subcellular localization by immunofluorescence microscopy, and their ability to effect several transformation-related cell properties. Glycerol gradient sedimentation of extracts from cells infected either with rASV 1702 or rASV 157 showed that soluble src proteins of these viruses were distributed between free and complexed forms as has been demonstrated for wild-type Rous sarcoma virus pp60src. Pulse-chase studies with rASV pp60src showed that, like wild-type Rous sarcoma virus pp60src, it was transiently found in a complexed form. Indirect immunofluorescence showed that size-variant pp60src proteins are localized in adhesion plaques and regions of cell-to-cell contact in rASV 1702- or 157-infected cells. This result is in contrast with the generalized localization of pp60src in plasma membranes of control rASV-infected cells which produce pp60src. Chicken embryo fibroblasts infected by rASVs 1702 and 157 display a partial-transformation phenotype with respect to (i) transformation-related morphology, (ii) cell surface membrane changes, and (iii) retained extracellular fibronectin. It is possible that the induction of a partial-transformation phenotype may be the result of the unique interaction of the src proteins encoded by these viruses with restricted areas of the plasma membrane.