Constitutive expression of c-Fos, FosB, Fra-1, or c-Jun in rat fibroblasts leads to up-regulation of the immediate-early gene fra-1. Using the posttranslational FosER induction system, we demonstrate that this AP-1-dependent stimulation of fra-1 expression is rapid, depends on a functional DNA-binding domain of FosER, and is a general phenomenon observed in different cell types. In vitro mutagenesis and functional analysis of the rat fra-1 gene in stably transfected Rat-1A-FosER fibroblasts indicated that basal and AP-1-regulated expression of the fra-1 gene depends on regulatory sequences in the first intron which comprise a consensus AP-1 site and two AP-1-like elements. We have also investigated the transactivating and transforming properties of the Fra-1 protein to address the significance of fra-1 up-regulation. The entire Fra-1 protein fused to the DNA-binding domain of Ga14 is shown to lack any transactivation function, and yet it possesses oncogenic potential, as overexpression of Fra-1 in established rat fibroblasts results in anchorage-independent growth in vitro and tumor development in athymic mice, fra-1 is therefore not only induced by members of the Fos family, but its gene product may also contribute to cellular transformation by these proteins. Together, these data identify fra-1 as a unique member of the fos gene family which is under positive control by AP-1 activity.