BCR/abl is a chimeric oncogene implicated in the pathogenesis of human chronic myelogenous leukemia. Expression of the BCR/abl gene induces hematologic malignancies in transgenic mice and transformation of interleukin-3-dependent hematopoietic cells. The mechanism of BCR/abl- mediated transformation of hematopoietic cells is poorly understood and involves activation of at least two signaling pathways, p21ras and PI 3- kinase. Here we report that PI 3,4-P2 and PI 3,4,5-P3, the enzymatic products of PI 3-kinase, accumulate in metabolically labeled transformed hematopoietic cells, in contrast to our previous report on the lack of accumulation of PI 3-kinase products in nontransformed NIH 3T3 fibroblasts that express p210 BCR/abl. Transformed cells also have increased PI 3-kinase activity in total cell extracts and membrane fractions. Activation of PI 3-kinase occurs by occupancy of SH2 domains of PI 3-kinase regulatory subunit, p85, by phosphorylated YXXM motifs. Therefore, we investigated whether BCR/abl binds to p85 and whether this binding is mediated by interaction of p85 SH2 domains with YXXM motif of BCR/abl. Association of p210 BCR/abl with p85 in immune complexes and with p85 SH2 domains was evident in hematopoietic cells that express the wt p210 BCR/abl. However, the binding of BCR/abl to p85 SH2 domains was abolished in cells expressing mutant, temperature- sensitive (ts) p210 BCR/abl in which the tyrosine in the YXXM motif of p210 BCR/abl was replaced by histidine. Despite lack of direct interaction with p85 SH2 domains, expression of ts p210 BCR/abl resulted in rapid, time-dependent activation of total and membrane- associated PI 3-kinase and increased PI 3-kinase activity in anti-P-tyr and anti-abl immunoprecipitates. These data suggest that BCR/abl- induced activation of PI 3-kinase in hematopoietic cells does not require binding of p85 SH2 domains to BCR/abl gene product and involves interaction with other tyrosine phosphorylated intermediate proteins.