We compared the ability of cellular and viral Jun (c-Jun and v-Jun) to transactivate target genes. c-Jun and v-Jun bind specifically to 12-O-tetradecanoylphorbol-13-acetate responsive elements [TREs, also called activator protein 1 (AP-1) motifs]. However, whereas c-Jun activates TRE-controlled promoters, v-Jun represses them. Cotransfection of the two Jun proteins reduces c-Jun-dependent transactivation. The expression of the endogenous c-jun gene, regulated through a promoter-proximal AP-1-binding site, is repressed in v-Jun-transformed chicken embryo fibroblasts. It is suggested that an M(r) 18,000 v-Jun peptide prominent in v-Jun-transformed cells acts as a transdominant-negative regulator of AP-1 activity and of c-jun expression. In contrast to the results with TRE sites, both v-Jun and c-Jun activate transcription through the human T-cell leukemia virus type I 21-bp repeat which contains a sequence homologous to the cyclic AMP responsive element. However, full-length Jun proteins bind to this site only with low affinity, and binding of the truncated v-Jun was barely detectable. These observations show that the oncogenic viral form of Jun differs from the cellular version in promoter preference and on certain promoters acts as an antagonist to c-Jun.