Provirus insertion in the last intron of the Tpl-2 gene in retrovirus-induced rat T-cell lymphomas results in the enhanced expression of a carboxy-terminally truncated Tpl-2 kinase. Here we show that the truncated protein exhibits an approximately sevenfold higher catalytic activity and is two- to threefold more efficient in activating the MAPK and SAPK pathways relative to the wild-type protein. The truncated Tpl-2 protein and a GST fusion of the Tpl-2 carboxy-terminal tail interact when coexpressed in Sf9 cells. Their interaction down-regulates the kinase activity of the truncated protein suggesting that tail-directed intramolecular interactions regulate the Tpl-2 kinase. Tpl-2 transgenic mice expressing the wild-type protein from the proximal Lck promoter fail to show a biological phenotype, whereas mice expressing the truncated protein develop large-cell lymphoblastic lymphomas of T-cell origin. These results show that Tpl-2 is an oncogenic kinase that is activated by carboxy-terminal truncation.