Human CTF/NF-I consists of a family of CCAAT box binding proteins that activate both transcription and DNA replication. Analysis of cDNA mutants expressed in E. coli and Drosophila cells reveals that the N-terminal portion of CTF-1 is sufficient for site-specific DNA recognition, protein dimerization, and adenovirus replication. In contrast, transcriptional activation requires an additional C-terminal domain. Furthermore, this transcription domain efficiently activates a heterologous promoter, such as SV40, when fused to the DNA binding domain of Sp1. The CTF C-terminal region consists of an unusual type of transcriptional activation domain containing approximately 25% proline residues. We propose that this proline-rich domain represents a novel class of activators which are distinct from those containing either acidic or glutamine-rich activation motifs. This indicates that transcriptional activation is likely to be mediated by several different mechanisms. In addition, these results suggest that the interactions, and consequently the mechanisms, governing transcriptional activation by CTF are distinct from those mediating DNA replication.