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The melanoma inducing locus of Xiphophorus encodes a tumorigenic version of a novel putative receptor tyrosine kinase (Xmrk). To elucidate the mechanism of oncogenic activation of Xmrk, we compared the structure and expression of two oncogenic loci with the corresponding proto-oncogene. Only minor structural alterations were found to be specific for the oncogenic Xmrk genes. Marked overexpression of the oncogene transcripts in melanoma, which are approximately 1 kb shorter than the proto-oncogene transcript, correlates with the malignancy of the tumors. The tumor transcripts are derived from an alternative transcription start site that is used only in the oncogenic loci. Thus, oncogenic activation of the melanoma inducing Xmrk gene appears primarily to be due to novel transcriptional control and overexpression.