Friend disease is an acute erythroleukemia induced by various strains of Friend virus and provides an excellent model to study the multistage progression of carcinogenesis. In the first stage of the disease, the virus infects erythroid progenitor cells and a viral glycoprotein, gp55, interacts with both the EpoR and a truncated form of the stem cell derived tyrosine kinase (STK), Sf-stk. This results in Epo independent expansion of erythroid progenitor cells. Companion with proviral integration, inactivation of p53 and activation of ets gene family members (Spi-1/PU1, Fli-1) in the late stage of disease will cause leukemic transformation. The majority of gp55 is retained on the ER membrane, with only 5% transported to the cell surface. Previous data has demonstrated that the activation of EpoR by gp55 through the dualtropic and transmembrane binding domain on the cell surface is critical for the early stage Friend disease. However, the mechanism by which gp55 leads to Sf-stk activation remains largely unknown. Consistent with previous reports, we find that gp55 immunoprecipitates with Sf-stk under nonreducing conditions and that coexpression of Sf-stk with gp55 results in enhanced tyrosine phosphorylation of Sf-stk. Moreover, we find that Sf-stk forms homo-oligomers when coexpressed with gp55 and, by introducing point mutations in the four cysteine residues in the gp55 ecotropic domain, the cysteine 338 mediates homo-oligomer formation of Sf-stk. Furthermore, mutation of cysteine 338 to alanine inhibits the ability of gp55 to induce Epo independent polyclonal expansion of erythroid precursor cells. We also demonstrate that, in the absence of gp55, Sf-stk is primarily located in the ER, but coexpression of gp55 induces cell surface localization of the truncated receptor. Further, we show that by adding a 6aa ER retention signal to the C-terminal of Sf-stk (Sf-stk-ER), Sf-stk-ER cannot be processed to cell membrane. However, gp55 retains the ability to bind and induce the tyrosine phosphorylation of Sf-stk-ER, and Grb2 is recruited to both Sf-stk and Sf-stk-ER when gp55 is present. Despite active signaling, our preliminary work failed to detect Epo independent colonies from BM cells transfected with Sf-stk-ER followed by Friend virus infection, indicating that a productive interaction with EpoR at the surface may be required for the differentiation of infected progenitors in vitro. Taken together, our data supports a model in which gp55 interaction with Sf-stk through cysteine 338 in the ecotropic domain of gp55 leads to oligomerization of the receptor, resulting in enhanced autophosphorylation and recruitment of Grb2, as well as relocation of active Sf-stk to the cell surface.