Chronic myelogenous leukemia and one type of acute lymphoblastic leukemia are characterized by a 9;22 chronosome translocation in which 5' sequences of the bcr gene become fused to the c-abl proto-oncogene. The resulting chimeric genes encode bcr/abl fusion proteins which have deregulated tyrosine kinase activity and appear to play an important role in induction of these leukemias. A series of bcr/abl genes were constructed in which nested deletions of the bcr gene were fused to the c-abl gene. The fusion proteins encoded by these genes were assayed for autophosphorylation in vivo and for differences in subcellular localization. Our results demonstrate that bcr sequences activate two functions of c-abl; the tyrosine kinase activity and a previously undescribed microfilament-binding function. Two regions of bcr which activate these functions to different degrees have been mapped: amino acids 1 to 63 were strongly activating and amino acids 64 to 509 were weakly activating. The tyrosine kinase and microfilament-binding functions were not interdependent, as a kinase defective bcr/abl mutant still associated with actin filaments and a bcr/abl mutant lacking actin association still had deregulated kinase activity. Modification of actin filament functions by the bcr/abl tyrosine kinase may be an important event in leukemogenesis.