The v-Erb A oncoprotein of avian erythroblastosis virus is derived from c-Erb A, a hormone-activated transcription factor. Notably, v-Erb A has sustained multiple mutations relative to c-Erb A and functions as a constitutive transcriptional repressor. We report here an analysis of the contributions of these different mutations to v-Erb A function. Our experiments demonstrate that two amino-acid differences between v-Erb A and c-Erb A, located in the 'I-box,' alter the dimerization properties of the viral protein, resulting in more stable homodimer formation, increased corepressor binding, and increased target gene repression. An additional amino-acid difference between v- and c-Erb A, located in helix 3 of the hormone binding domain, renders corepressor binding by the viral protein more resistant to release by thyroid hormone. Finally, we report that a C-terminal truncation in v-Erb A not only inhibits exchange of corepressor and coactivator, as previously noted, but also permits v-Erb A to recruit both SMRT and N-CoR corepressors, whereas c-Erb A is selective for N-CoR. The latter two mutations in v-Erb A also impair its ability to suppress c-Jun function in response to T3 hormone. We propose that the acquisition of oncogenic potential by the v-Erb A protein was a multistep process involving a series of mutations that alter the transcriptional repressive properties of the viral protein through multiple mechanisms.