Expression of cytokine genes in T cells is thought to result from a complex network of antigen- and mitogen-activated transcriptional regulators. CP2, a factor homologous to Drosophila Elf-1 and previously found to be a critical regulator of several viral and cellular genes in response to developmental signals, is rapidly activated in T helper (Th) cells in response to mitogenic stimulation. Here we show that overexpression of CP2 enhances interleukin (IL)-4 promoter-driven chloramphenicol acetyltransferase expression, while repressing IL-2 promoter activity, in transiently transfected Jurkat cells. A CP2-protected element, partially overlapping the nuclear factor of activated T cell-binding P2 sequence, was required for IL-4 promoter activation in CP2-overexpressing Jurkat cells. This CP2-response element is the site of a cooperative interaction between CP2 and an inducible heteromeric co-factor(s). Mutation of conserved nucleotide contacts within the CP2-response element prevented CP2 binding and significantly reduced constitutive and induced IL-4 promoter activity. Expression of a CP2 mutant lacking the Elf-1-homology region of the DNA-binding domain inhibited IL-4 promoter activity in a dominant negative fashion in transiently transfected Jurkat cells. Moreover, overexpressed CP2 markedly enhanced, while its dominant negative mutant consistently suppressed, expression of the endogenous IL-4 gene in the murine Th2 cell line D10. Taken together, these findings point to CP2 as a critical IL-4 transactivator in Th cells.