Truncated forms of the NOTCH1 transmembrane receptor engineered to resemble mutant forms of NOTCH1 found in certain cases of human T cell leukemia/lymphoma (T-ALL) efficiently induce T-ALL when expressed in the bone marrow of mice. Unlike full-sized NOTCH1, two such truncated forms of the protein either lacking a major portion of the extracellular domain (DeltaE) or consisting only of the intracellular domain (ICN) were found to activate transcription in cultured cells, presumably through RBP-Jkappa response elements within DNA. Both truncated forms also bound to the transcription factor RBP-Jkappa in extracts prepared from human and murine T-ALL cell lines. Transcriptional activation required the presence of a weak RBP-Jkappa-binding site within the NOTCH1 ankyrin repeat region of the intracellular domain. Unexpectedly, a second, stronger RBP-Jkappa-binding site, which lies within the intracellular domain close to the transmembrane region and significantly augments association with RBP-Jkappa, was not needed for oncogenesis or for transcriptional activation. While ICN appeared primarily in the nucleus, DeltaE localized to cytoplasmic and nuclear membranes, suggesting that intranuclear localization is not essential for oncogenesis or transcriptional activation. In support of this interpretation, mutation of putative nuclear localization sequences decreased nuclear localization and increased transcriptional activation by membrane-bound DeltaE. Transcriptional activation by this mutant form of membrane-bound DeltaE was approximately equivalent to that produced by intranuclear ICN. These data are most consistent with NOTCH1 oncogenesis and transcriptional activation being independent of association with RBP-Jkappa at promoter sites.