A key molecular event in the genesis of Ewing's sarcoma is the consistent presence of chromosomal translocations that result in the formation of proteins in which the amino terminus of EWS is fused to the carboxyl terminus, including the DNA binding domain, of one of five different Ets family proteins. These fusion proteins function as deregulated transcription factors, resulting in aberrant control of gene expression. Recent data indicate that some EWS-Ets target promoters, including the uridine phosphorylase (UPP) promoter, harbor tandem binding sites for Ets and AP-1 proteins. Here we show that those Ets family proteins that participate in Ewing's sarcoma, including Fli1, ERG, and ETV1, cooperatively bind these tandem elements with Fos-Jun while other Ets family members do not. Analysis of this cooperativity in vitro shows that (i) many different spatial arrangements of the Ets and AP-1 sites support cooperative binding, (ii) the bZIP motifs of Fos and Jun are sufficient to support this cooperativity, and (iii) both the Ets domain and carboxy-terminal sequences of Fli1 are important for cooperative DNA binding. EWS-Fli1 activates the expression of UPP mRNA, is directly bound to the UPP promoter, and transforms 3T3 fibroblasts; in contrast, a C-terminally truncated mutant form of EWS-Fli1 that cannot cooperatively bind DNA with Fos-Jun is defective in all of these properties. The results show that the ability of EWS-Ets proteins to cooperatively bind DNA with Fos-Jun is critical to the biologic activities of these proteins. The results have implications for understanding the pathogenesis of Ewing's sarcoma. In addition, they may be relevant to the mechanisms of Ras-dependent activation of genes that harbor tandem Ets and AP-1 binding sites.