The Harvey murine sarcoma virus (Ha-MuSV) transforming gene, v-rasH, encodes a 21,000 molecular weight protein (p21) that is closely related to the p21 proteins encoded by the cellular transforming genes of the ras gene family. The primary translation product (prop21), which is found in the cytosol, undergoes posttranslational modification and the mature protein subsequently becomes associated with the inner surface of the plasma membrane and binds lipid tightly. The p21 proteins have the capacity to bind guanine nucleotides non-covalently in vitro. To assess the biological relevance of these biochemical features of the protein, we have now studied a series of deletion mutants located at or near the C-terminus of the viral p21 protein. Our tissue culture studies indicate that amino acids located at or near the C-terminus are required for cellular transformation, membrane association and lipid binding.