We show that c-Myc, in addition to activating transcription through E-box Myc binding sites (Ems), also represses transcription by a mechanism dependent on initiator (Inr) elements of the basal promoters of susceptible genes. Repression was first observed as a component of c-Myc biphasic regulation of the adenovirus-2 major late promoter (MLP), which contains both Inr and Ems sequences. Two differentiation-specific genes containing Inr, the C/EBP alpha and albumin genes, are repressed through their basal promoters by c-Myc, but are activated by the related B-HLH-LZ factor, USF. Repression requires both the B-HLH-LZ and Myc box II (MBII) domains. Significantly, a MBII deletion mutant which is deficient in repression, but transactivates normally, fails to cooperate with an activated ras gene to transform primary fibroblasts. Thus Myc-dependent transactivation is insufficient for Ras cooperation and the novel transcription repression function is implicated in Ras cooperation as well as the suppression of Inr-dependent genes.