The p53 protein is an important determinant in human cancer and regulates the growth of cells in culture. It is known to be a sequence-specific DNA-binding protein with a powerful activation domain, but it has not been established whether it regulates transcription directly. Here we show that intact purified wild-type human and murine p53 proteins strongly activate transcription in vitro. This activation depends on the ability of p53 to bind to a template bearing a p53-binding sequence. By contrast, tumour-derived mutant p53 proteins cannot activate transcription from the template at all, and when complexed to wild-type p53, these mutants block transcriptional activation by the wild-type protein. Moreover, the simian virus 40 large T antigen inhibits wild-type p53 from activating transcription. Our results support a model in which p53 directly activates transcription but this activity can be inhibited by mutant p53 and SV40 large T antigen through interaction with wild-type p53.