Rous sarcoma virus (RSV) mainly replicates in avian fibroblasts, and the U3 enhancer region of the long terminal repeats of RSV contains the determinants for its tissue-tropic expression. We describe the cloning and characterization of an avian gene that encodes a protein capable of binding to the enhancer region of Rous sarcoma virus. A PCR-derived probe corresponding to the U3 region of RSV was used to isolate a cDNA clone by screening a chicken cDNA expression library. The cDNA is predicted to encode a polypeptide of 298 amino acids that is homologous to the Y-box (inverted CCAAT) family of DNA-binding transcription factors. This factor, which we refer to as Rous sarcoma virus enhancer factor-it (RSV-EF-II), shows 99% aa identity over a 105-amino-acid stretch that is highly conserved in all Y-box proteins, and is commonly referred to as the cold shock domain. RSV-EF-II selectively binds to single-stranded DNA, and the binding site, as determined by electrophoretic mobility shift assays, consists of the sequence 5' GTACCACC 3' located between nucleotides -112 to -119 in the noncoding strand of the RSV enhancer. Although RSV-EF-II shares considerable homology with the Y-box family of proteins, it does not bind to the inverted CCAAT boxes at positions -65 to -69 and -129 to -133 in the RSV LTR. Northern analysis indicates that RSV-EF-II-specific transcripts are expressed predominantly in avian fibroblasts and muscle tissue. The results of these binding and mRNA expression experiments suggest that RSV-EF-II may play an important role in tissue- and host-specific expression of RSV LTR-driven gene expression. Further, we show that RSV-EF-II acts as a repressor of transcription. (C) 1996 Academic Press, Inc.