The Kfgf gene, which encodes a member of the fibroblast growth factor family, was originally discovered by assaying human tumor DNA for dominantly transforming oncogenes. The 22-kD kFGF product contains a single site for asparagine-linked glycosylation and an amino-terminal signal peptide for vectorial synthesis into the endoplasmic reticulum and eventual secretion. To determine whether these features are necessary for transformation, we have constructed mutants of kFGF that are impaired for glycosylation or secretion. All mutants retained the ability to induce DNA synthesis when added to quiescent cells, and the absence of glycosylation had no appreciable effect on the transformation efficiency on NIH3T3 cells. In contrast, mutants of kFGF that remain in the cytoplasm or are retained in the secretory pathway, through addition of a KDEL motif, score negative in standard transformation assays. Since transformation by either the glycosylated or unglycosylated form of kFGF can be reversed by addition of suramin, the data imply that secretion of kFGF, or surface localization of the ligand/receptor complex, is a prerequisite for transformation.