Genes encoding transcription factors are frequently altered by chromosomal translocations in acute lymphoblastic leukemia (ALL), suggesting that aberrant transcriptional regulation plays a prominent role in leukemogenesis. E2A-hepatic leukemia factor (HLF), a chimeric transcription factor created by the t(17;19), consists of the amino terminal portion of E2A proteins, including two experimentally defined transcriptional activation domains (TADs), fused to the HLF DNA binding and protein dimerization basic leucine zipper (bZIP) domain. To understand the mechanisms by which E2A-HLF induces leukemia and the crucial functions contributed by each constituent of the chimera, it is essential to define the normal transcriptional regulatory properties of HLF and related bZIP proteins. To address these questions, we cloned the human homologue of TEF/VBP, a bZIP protein closely related to HLF. Using a binding site selection assay, we found that TEF bound preferentially to the consensus sequence 5'-GTTACGTAAT-3', which is identical to the previously determined HLF recognition site. TEF and HLF activated transcription of consensus site-containing reporter genes in several different cell types with similar potencies. Using GAL4 chimeric proteins, a TAD was mapped to a discrete approximate 40 amino acid region of TEF and HLF within which they share 72% amino acid identity and 85% similarity. The TEF/HLF activation domain (THAD) has a predicted helical secondary structure, but shares no sequence homology with previously reported TADs. The THAD contained most, if not all, of the transcriptional activation properties present in both TEF and HLF and its deletion completely abrogated transcriptional activity of TEF and HLF in both mammalian cells and yeast. Thus, TEF and HLF share indistinguishable DNA-binding and transcriptional regulatory properties, whose alteration in leukemia may be pathogenetically important.