The basic/leucine zipper (bZip) transcription factor, CREB, binds to the CRE element (TGANNTCA). The transcriptional activity of CREB requires phosphorylation of the protein on a serine residue at position 119 (ref. 6). CREs are present in a number of T-cell genes but the precise role of CREB in T-cell differentiation and function was unknown. Here we show that resting thymocytes contain predominantly unphosphorylated (inactive) CREB, which is rapidly activated by phosphorylation on Ser 119 following thymocyte activation. T-cell development is normal in transgenic mice that express a dominant-negative form of CREB (CREBA119, with alanine at position 119) under the control of the T-cell-specific CD2 promoter/enhancer. In contrast, thymocytes and T cells from these animals display a profound proliferative defect characterized by markedly decreased interleukin-2 production, G1 cell-cycle arrest and subsequent apoptotic death in response to a number of different activation signals. This proliferative defect is associated with the markedly reduced induction of c-jun, c-fos, Fra-2 and FosB following activation of the CREBA119 transgenic thymocytes. We propose that T-cell activation leads to the phosphorylation and activation of CREB, which in turn is required for normal induction of the transcription factor AP1 and subsequent interleukin-2 production and cell-cycle progression.