Cell transformation by nuclear oncogenes such as c-myc presumably involves the transcriptional activation of a set of target genes that participate in the control of cell division. The function of a small evolutionarily conserved domain of the c-myc gene encompassing amino acids 129 to 145 was analyzed to explore the relationship between cell transformation and transcriptional activation. Deletion of this domain inactivated the c-myc oncogene for cell transformation while retaining the ability to activate transcription of either myc consensus binding sites or a GAL4-dependent promoter when the c-myc N-terminus was fused to the GAL4 DNA-binding domain. Point mutations that altered a conserved tryptophan (amino acid 136) within this domain had similar effects. Expression of the wt c-Myc N terminus (amino acids 1 to 262) as a GAL4 fusion was a dominant inhibitor of cell transformation by the c-myc oncogene, and this same domain also inhibited transformation by the adenovirus E1A gene. Surprisingly, deletion of amino acids 129 to 145 eliminated the dominant negative activity of GAL4-Myc on both c-myc and E1A transformation. Expression of the GAL4-Myc protein in Cos cells led to the formation of a specific complex between the Myc N terminus and a nuclear factor, and this complex was absent with the dl129-145 mutant. These results suggest that an essential domain of the c-Myc protein interacts with a specific nuclear factor that is also required for E1A transformation.