Pancreatic beta-cell-type-specific transcription of the insulin gene is principally controlled by trans-acting factors which influence insulin control element (ICE)-mediated expression. The ICE activator is composed, in part, of the basic helix-loop-helix proteins E12, E47, and E2-5 encoded by the E2A gene. Previous experiments showed that ICE activation in beta cells was repressed in vivo by the c-jun proto-oncogene (E. Henderson and R. Stein, Mol. Cell. Biol. 14:655-662, 1994). Here we focus on the mechanism by which c-Jun inhibits ICE-mediated activation. c-Jun was shown to specifically repress the transactivation potential of the E2A proteins. Thus, we found that the activity of GAL4:E2A fusion constructs was inhibited by c-Jun. The transrepression capabilities of c-Jun were detected only in pancreatic islet cell lines that contained a functional ICE activator. Repression of GAL4:E2A was mediated by the basic leucine zipper regions of c-Jun, which are also the essential regions of this protein necessary for controlling ICE activator-stimulated expression in vivo. The specific target of c-Jun repression was the transactivation domain (located between amino acids 345 and 408 in E12 and E47) conserved in E12, E47, and E2-5. In contrast, the activation domain unique to the E12 and E47 proteins (located between amino acids 1 and 99) was unresponsive to c-Jun. Our results indicate that c-Jun inhibits insulin gene transcription in beta cells by reducing the transactivation potential of the E2A proteins present in the ICE activator complex.