Human CCAAT/enhancer-bindimg protein epsilon (C/EBP epsilon), a new member of the C/EBP family, significantly upregulates both the mim-1 and human myeloperoxidase promoters, suggesting an important role for C/EBP epsilon in the transcriptional regulation of a subset of myeloid-specific genes. To elucidate the structure and function of C/EBP epsilon in transcriptional activation, amino acid residues 1-115, 147-249, or 1-249 of C/EBP epsilon were fused to the yeast GAL4 DNA binding domain. These expression vectors were cotransfected with a chloramphenicol acetyltransferase reporter gene and, in all cell lines tested, only the GAL-C/EBP epsilon-(1-115) fusion protein significantly tly activated expression from the chloramphenicol acetyltransferase reporter gene. Sixteen deletion mutants of C/EBP epsilon mapped the transactivation domain to amino acids 1-18 at the N terminus and revealed the presence of a transcription repression element between amino acid residues 116 and 162. Expression vectors containing the repression domain of C/EBP epsilon strongly inhibited gene transcription from TK, SV40, and adenoviral major late promoters bearing GAL4 binding sites. Fusion of this repression domain to the VP16 activation domain inhibited the transactivation function of VP16. Deletion of this repression domain increased gene transcription from a neutrophil elastase promoter-luciferase reporter. Taken together, these data suggest that C/EBP epsilon regulates transcription by utilizing both activation and repression functions.