The retroviral oncogene qin codes for a protein that belongs to the family of the winged helix transcription factors. The viral Qin protein, v-Qin, differs from its cellular counterpart, c-Qin, by functioning as a stronger transcriptional repressor and a more efficient inducer of tumors. This observation suggests that repression may be important in tumorigenesis. To test this possibility, chimeric proteins were constructed in which the Qin DNA-binding domain was fused to either a strong repressor domain (derived from the Drosophila Engrailed protein) or a strong activator domain (from the herpes simplex virus VP16 protein). The chimeric transcriptional repressor, Qin-Engrailed, transformed chicken embryo fibroblasts in culture and induced sarcomas in young chickens. The chimeric activator, Qin-VP16, failed to transform cells in vitro or in vivo and caused cellular resistance to oncogenic transformation by Qin. These data support the conclusion that the Qin protein induces oncogenic transformation by repressing the transcription of genes which function as negative growth regulators or tumor suppressors.