Marek's disease virus (MDV) is an avian herpesvirus that induces a variety of diseases, including T-cell lymphomas, in chickens. In latently infected, transformed lymphoid cells, very few viral transcripts or proteins are detected. We previously described a gene, meq (MDV EcoQ), which is persistently expressed in MDV-transformed tumor samples and cell lines. meq codes for a 339-amino-acid protein with a basic-leucine zipper domain near its N terminus and a proline-rich domain near its C terminus. The basic-leucine zipper domain shows homology with Jun/Fos family proteins, whereas the proline-rich domain resembles that of the WT-1 tumor suppressor protein. These structural features raise the possibility that Meq functions as a transcription factor in regulating viral latency or oncogenesis. In this report, we show that the proline-rich domain is a potent transcription activator when fused to the yeast (Saccharomyces cerevisiae) Gal4(1-147) DNA-binding domain. The transactivation activity maps to the C-terminal 130 amino acids, with the last 33 amino acids essential. In the absence of these 33 amino acids, a two-and-one-half proline-rich repeat structure was found to exhibit repression activity. We further show that Meq is able to dimerize not only with itself but also with c-Jun. Meq/c-Jun heterodimers bind to an AP1-like sequence in the meq promoter region with an affinity much greater than that of Meq/Meq or c-Jun/c-Jun homodimers. Cotransfection chloramphenicol acetyltransferase assays suggest that the Meq/c-Jun heterodimers can up-regulate Meq expression in both chicken embryo fibroblasts and F9 cells. Our data provide the first biochemical evidence that Meq is a transcriptional factor and identify c-Jun as one of Meq's interacting partners.