The 'core' sequence is critical for efficient transcriptional activity of the SV40 enhancer. Moreover, the core was shown to be involved in a signal transduction pathway elicited by treatment of cells with phorbol ester tumor promoters. We report here the identification and characterization of activator protein-3 (AP-3), which recognizes the core element. AP-3 was purified to near homogeneity and identified as a 48K polypeptide. The purified protein is an efficient transcriptional activator in vitro. In addition, we show that AP-3 and a second factor that recognizes the SV40 enhancer, AP-2, interact in a mutually exclusive manner. These studies should facilitate understanding of the mechanism by which the SV40 enhancer achieves its characteristic broad cell-type specificity.