Studies have demonstrated that the retinoblastoma susceptibility gene product, RB, can either positively or negatively regulate expression of several genes through cis-acting elements in a cell-type-dependent manner. The nucleotide sequence of the retinoblastoma control element (RCE) motif, GCCACC or CCACCC, and the Sp1 consensus binding sequence, CCGCCC, can confer equal responsiveness to RB. Here, we report that RB activates transcription of the c-jun gene through the Sp1-binding site within the c-jun promoter. Preincubation of crude nuclear extracts with monoclonal antibodies to RB results in reduction of Sp1 complexes in a mobility shift assay, while addition of recombinant RB in mobility shift assay mixtures with CCL64 cell extracts leads to an enhancement of DNA-binding activity of SP1. These results suggest that RB is directly or indirectly involved in Sp1-DNA binding activity. A mechanism by which RB regulates transactivation is indicated by our detection of a heat-labile and protease-sensitive Sp1 negative regulator(s) (Sp1-I) that specifically inhibits Sp1 binding to a c-jun Sp1 site. This inhibition is reversed by addition of recombinant RB proteins, suggesting that RB stimulates Sp1-mediated transactivation by liberating Sp1 from Sp1-I. Additional evidence for Sp1-I involvement in Sp1-mediated transactivation was demonstrated by cotransfection of RB, GAL4-Sp1, and a GAL4-responsive template into CV-1 cells. Finally, we have identified Sp1-I, a approximately 20-kDa protein(s) that inhibits the Sp1 complexes from binding to DNA and that is also an RB-associated protein. These findings provide evidence for a functional link between two distinct classes of oncoproteins, RB and c-Jun, that are involved in the control of cell growth, and also define a novel mechanism for the regulation of c-jun expression.