The native envelope gene (env) of Jaagsiekte sheep retrovirus (JSRV) also acts as an oncogene. To investigate the mechanism of transformation, we performed yeast 2-hybrid screening for cellular proteins that interact with Env. Among several candidates, we identified mouse or rat zinc finger protein 111 (zfp111). The interaction between Env and Zfp111 was confirmed through in vivo coimmunoprecipitation assays. Knockdown of endogenous Zfp111 caused a decrease in cell transformation by JSRV Env, while overexpression of Zfp111 increased overall Env transformation, supporting a role for Zfp111 in Env transformation. Knockdown of Zfp111 had no effect on the growth rate of parental rat 208F cells, while it decreased the proliferation rate of JSRV-transformed 208F cells, suggesting that JSRV-transformed cells became dependent on Zfp111. In addition, Zfp111 preferentially bound to a higher-mobility form of JSRV Env that has not been described previously. The higher-mobility form of Env (P70(env)) was found exclusively in the nuclear fraction, and size of its polypeptide backbone was the same as that of the cytoplasmic Env polyprotein (Pr80(env)). The differences in glycosylation between the two versions of Env were characterized. These results identify a novel cellular protein, Zfp111, that binds to the JSRV Env protein, and this binding plays a role in Env transformation. These results indicate that JSRV transformation also involves proteins and interactions in the nucleus.