The Myc family proteins are thought to be involved in transcription because they have both a carboxy-terminal basic-helix-loop-helix-zipper (bHLH-Z) domain, common to a large class of transcription factors, and an amino-terminal fragment which, for c-Myc, has transactivating function when assayed in chimaeric constructs. In addition, c-, N- and L-Myc proteins heterodimerize, in vitro and in vivo, with the bHLH-Z protein Max. In vitro, Max homodimerizes but preferentially associates with Myc, which homodimerizes poorly. Furthermore Myc-Max heterodimers specifically bind the nucleotide sequence CACGTG with higher affinity than either homodimer alone. The identification of Max and the specific DNA-binding activities of Myc and Max provides an opportunity for directly testing the transcriptional activities of these proteins in mammalian cells. We report here that Myc overexpression activates, whereas Max overexpression represses, transcription of a reporter gene. Max-induced repression is relieved by overexpression of c-Myc. Repression requires the DNA-binding domain of Max, whereas relief of repression requires the dimerization and transcriptional activation activities of Myc. Both effects require Myc-Max-binding sites in the reporter gene.