The viral Jun protein (v-Jun) transforms chicken embryo fibroblasts (CEF) more effectively than its cellular counterpart (c-Jun). In certain cell types v-Jun is also a stronger transcriptional activator than c-Jun. These functional differences between v-Jun and c-Jun result from a deletion in v-Jun (referred to as "delta deletion") that seems to weaken the interaction of Jun with a negative cellular regulator molecule. These observations suggested that the oncogenicity of v-Jun may be due to an enhanced ability to activate transcription of target genes. To test this hypothesis, we constructed several deletions in the delta domain of chicken c-Jun and determined their transforming and transactivating properties. Surprisingly, we found an inverse correlation between the ability of the mutants to transform CEF and to transactivate the collagenase and transin promoters in CEF. In contrast, there was no significant effect of the delta mutations in c-Jun on transactivation in F9 murine embryonal carcinoma cells. The function of the delta region is therefore cell-type specific. The inverse correlation between transformation and transactivation in CEF suggests that the strong growth-promoting effect of v-Jun may be related to a failure to activate the transcription of growth attenuating genes.