Jun is a transcription factor belonging to the activator protein 1 family. A mutated version of Jun (v-Jun) transduced by the avian retrovirus ASV17 induces oncogenic transformation in avian cell cultures and sarcomas in young galliform birds. The oncogenicity of Jun probably results from transcriptional deregulation of v-Jun-responsive target genes. Here we describe the identification and characterization of a growth-related v-Jun target, a homolog of heparin-binding epidermal growth factor-like growth factor (HB-EGF). HB-EGF is strongly expressed in chicken embryo fibroblasts (CEF) transformed by v-Jun. HB-EGF expression is not detectable or is marginal in nontransformed CEF. Using a hormone-inducible Jun-estrogen receptor chimera, we found that HB-EGF expression is correlated with v-Jun activity. In this system, induction of v-Jun is followed within 1 hr by elevated levels of HB-EGF. In CEF infected with various Jun mutants, HB-EGF expression is correlated with the oncogenic potency of the mutant. Constitutive expression of HB-EGF conveys to CEF the ability to grow in soft agar and to form multilayered foci of transformed cells on a solid substrate. These observations suggest that HB-EGF is an effector of Jun-induced oncogenic transformation.