In chicken embryo fibroblasts, phosphorylation of the 40S ribosomal protein S6 increases during G1 but returns to basal level by mitosis. In contrast, in Rous sarcoma virus (RSV)-transformed fibroblasts, S6 remains highly phosphorylated throughout mitosis. This study investigated the mechanism by which RSV alters the pattern of S6 phosphorylation. Pulse-chase experiments demonstrate that phosphate turnover in S6 is rapid in normal cells and in cells infected with an RSV transformation-defective virus. In contrast, phosphate turnover in S6 is severely reduced in cells infected with temperature-sensitive RSV at a temperature permissive for transformation, indicating a diminished S6 phosphatase activity. Fractionation of cell lysates by DEAE chromatography showed an almost threefold lower S6 phosphatase activity in RSV-transformed versus normal cells. The S6 phosphatase was sensitive to inhibitor 2 and specifically recognized by an antibody to type 1 phosphatase (PP1). The S6 phosphatase activity recovered by immunoprecipitation of PP1 was threefold lower in transformed cells, but the steady-state level of expression and the rate of synthesis of PP1 were not altered by oncogenic transformation. Together, the results show that transformation by RSV reduced the S6-PP1 activity.