Cell fate determination in invertebrate and vertebrate systems is regulated by the Notch signaling pathway. Four mammalian Notch genes, Notch 1-4, encode differentially expressed transmembrane receptors. The canonical Notch pathway involves proteolytic liberation of the Notch-1 intracellular domain (NIC-1), which activates CSL ((C) under bar BF1, (S) under baru(H), and (L) under bar ag-1)-mediated transactivation. We showed previously that NIC-1 also represses activator protein-1 (AP-1)-mediated transactivation. The N-terminal RAM (RBP-Jkappa associated molecule) domain of NIC-1 was required for both activation and repression. To investigate the mechanism of AP-1 repression, we tested whether distinct sequences within the RAM domain mediate activation versus repression. We analyzed the capacity of RAM domain mutants to bind endogenous CBF1, to activate CSL-mediated transactivation, and to repress AP-1. A mutant lacking 20 amino acids of the RAM domain (Delta1759-1778) resembled the RAM domain deletion mutant in being defective in all activities. Analysis of 14 deletion and alanine substitution mutants revealed a correlation between CBF1 binding, CSL-mediated transactivation, and AP-1 repression. Stably transfected K562 cells could only tolerate very low level expression of wild-type NIC-1 and NIC-1 mutants retaining activation/repression activities. By contrast, transcriptionally compromised NIC-1 mutants accumulated at high levels. These results support a model in which the binding of NIC-1 to CBF1 is required for AP-1 repression and reveal a powerful cell-sensing mechanism that suppresses the levels of transcriptionally competent NIC-1.