The vav proto-oncogene encodes a protein with multiple modulae domains that enable it to function as a mediator, linking tyrosine signaling to downstream events in hematopoietic cells. Circumstantial evidence suggests that protein-protein interactions exerted by two of these domains, the Src homology 2 (SH2) and the Src homology 3 (SH3), play an important role in the regulation of Vav activity. To study the relevance of the SH3 domain for the function of vav as a transforming gene, we have created several mutations in the SH3 domain located at its carboxy region. Substitution of the non-conserved aspartic acid 797 (to asparagine, D797N) retained the transforming potential of the vav oncogene, whereas substitutions of five highly conserved amino-acids: alanine 789 (to asparagine, A789N), leucine 801 (to arginine, L801R), tryptophan 821 (to arginine, W821R), glycine 830 (to valine, G830V) and valine 837 (to glutamic acid, V837E) greatly reduced its transforming potential. The mutant proteins resemble Vav in many biochemical properties; however, while the transforming mutant protein (D797N) associates with several unidentified proteins in a manner similar to that of Vav, the non-transforming mutant Vav proteins react very poorly with these proteins. Among the known Vav-interacting proteins, hnRNP-K associates with all mutant proteins except A789N and V837E whereas binding of Zyxin to any of the mutant proteins is not affected. Taken together, our results clearly demonstrate that the SH3 domain has a positive effect on vav activity and is needed for vav transformation. The vavSH3C associating protein(s) that are crucial for its activity as a transforming gene have probably not yet been identified.