Interleukin 1 alpha (IL-1 alpha) is a pleiotropic cytokine involved in the immune response, inflammatory processes, and hematopoiesis, and acts as a mitogen for several malignant cell types, including acute leukemia and Kaposi sarcoma cells. These diverse activities have been exclusively attributed to the plasma membrane receptor-binding, 17-kDa C-terminal component (mature IL-1 alpha) that results from proteolytic processing of the 31- to 33-kDa precursor protein. No biologic function has been ascribed to the unusually large, 16-kDa N-terminal propiece formed as a result of proteolytic processing of IL-1 alpha. We report that the IL-1 alpha N-terminal propiece is concentrated by means of a nuclear localization sequence within the nuclei of both transfected and leukemic cell lines. Overexpression of this component in glomerular mesangial cells, a model perivascular myofibroblast cell type capable of IL-1 alpha synthesis and processing, results in malignant transformation to a spindle cell-type tumor. The functionally bipartite nature of the IL-1 alpha precursor represents a unique combination of the C-terminal, classical cytokine and an N-terminal nuclear oncoprotein. These findings suggest that nuclear transport of the IL-1 alpha N-terminal component may represent a critical component in the transformation of IL-1 alpha-producing cells in the bone marrow or the perivascular area to a malignant phenotype.