The v-rel oncogene product from the avian reticuloendotheliosis virus strain T corresponds to a member of the Rel-related family of enhancer-binding proteins that includes both the mammalian 50- and 65-kDa subunits of the NF-kappa B transcription factor complex. However, in contrast to NF-kappa B, v-Rel has been shown to function as a dominant-negative repressor of kappa B-dependent transcription in many mature cell types. We now demonstrate that a highly conserved motif within the Rel homology domain of v-Rel containing a consensus protein kinase A phosphorylation site is required for DNA binding, transcriptional repression, and cellular transformation mediated by this oncoprotein. However, replacement of the serine phosphate acceptor within the protein kinase A site with an alanine did not alter any of these functions of v-Rel, suggesting that phosphorylation at this site is not central to the regulation of this oncogene product. Rather, the inactive mutations appear to identify a functional domain within v-Rel required for these various biological activities. It is notable that these same mutations do not impair the ability of v-Rel to heterodimerize with the 50-kDa subunit of NF-kappa B, suggesting that v-Rel-mediated transcriptional repression likely involves direct nuclear blockade of the kappa B enhancer rather than indirect alterations in the composition of preformed cytoplasmic NF-kappa B complexes. Paradoxically, when introduced into undifferentiated F9 cells, v-Rel functions as a kappa B-specific transcriptional activator rather than as a dominant-negative repressor. These stimulatory effects of v-Rel require both the conserved protein kinase A phosphorylation site and additional unique C-terminal sequences not needed for v-Rel-mediated repression in mature cells. Retinoic acid-induced differentiation of these F9 cells restores the repressor function of v-Rel. These opposing biological actions of v-Rel occurring in cells at distinct stages of differentiation may have important implications for the mechanism of v-Rel-mediated transformation occurring in avian splenocytes.