We have examined a series of small deletion mutants within exon 2 of the adenovirus 2/5 E1A oncogene product, the 243R protein, for immortalization, ras cooperative transformation, tumorigenesis and metastasis. Compared with wild-type 243R, various deletion mutants located between residues 193 and 243 cooperated more efficiently with ras to induce large transformed foci of less adherent cells that were tumorigenic and metastatic. However, the greatest enhancement of transformation (comparable to that obtained with a deletion of the C-terminal 67 amino acids) was observed with a mutant carrying a deletion of residues 225-238. This mutant was also more defective in immortalization. These results suggest that this 14 amino acid region may contain a function that is important for immortalization and negative modulation of tumorigenesis and metastasis. To identify cellular proteins that may associate with the exon 2-coded region of E1A (C-terminal half) and modulate its transformation potential, we constructed a chimeric gene coding for the C-terminal 68 amino acids of E1a fused to bacterial glutathione-S-transferase (GST). This fusion protein was used to purify cellular proteins that bind to the C-terminal region of E1a. A 48 kDa cellular protein doublet (designated CtBP) was found to bind specifically to the GST-E1a C-terminal fusion protein as well as to bacterially expressed full-length E1a (243R) protein. It also co-immunoprecipitated specifically with E1a. Analysis of a panel of GST-E1a C-terminal mutant proteins indicates that residues 225-238 are required for the association of E1a and CtBP, suggesting a correlation between the association of CtBP and the immortalization and transformation modulating activities of exon 2. CtBP is a phosphoprotein and the level of phosphorylation of CtBP appears to be regulated during the cell cycle, suggesting that it may play an important role during cellular proliferation.