The transactivation of genes through the cAMP-regulated enhancer (CRE) is proposed to occur by the binding and phosphorylation of the transcription factor CREB (CRE-binding protein). Originally believed to be a single protein, more than 10 different CREB proteins have been cloned. The contributions of each of these factors to gene regulation have yet to be determined unambiguously. We have isolated a CREB cDNA that contains a mutation of a single amino acid in the DNA-binding domain. In gel shift assays, this mutant, designated KCREB, is unable to bind to the somatostatin (SS) CRE. In addition, KCREB acts as a dominant repressor of the wild-type factor, blocking the ability of wild-type CREB to bind to the CRE when present as a KCREB:CREB heterodimer. The KCREB mutant also acts as a dominant repressor in vivo, completely blocking the ability of wild-type CREB to mediate induction by protein kinase-A of a SS CRE reporter gene in F9 teratocarcinoma cells. We have used this mutant to analyze the participation of CREB in the induction of the SS promoter in CA-77 cells, a medullary thyroid carcinoma cell line that produces high levels of SS. Although KCREB can block a portion of the cAMP induction of the SS promoter in CA-77 cells, approximately 45% of the induction remains insensitive to the mutant. These data support the paradigm that CREB is involved in the cAMP induction of SS in vivo. Furthermore, the inability of KCREB to completely block cAMP-mediated SS expression in CA-77 cells suggests that additional factors may contribute to the cAMP regulation of CRE function.