Grb4 is an adaptor protein consisting of three src homology (SH) 3 domains and a single SH2 domain. We previously cloned Grb4 as a direct interacting partner of Bcr-Abl and v-Abl via the Grb4 SH2 domain. We now show that overexpression of Grb4 results in significant inhibition of v-Abl-induced transcriptional activation from promitogenic enhancer elements such as activator protein 1 (AP-1) and serum-responsive element (SRE). We demonstrate that the inhibitory activity of Grb4 is independent of the direct interaction of v-Abl and Grb4: a Grb4 mutant that lacks a functional SH2 domain shows an even more pronounced inhibition of AP-1/SRE. Further mutational analysis revealed that the first two SH3 domains primarily mediate the inhibitory function. The inhibitory activity of Grb4 is specific for c-jun/c-fos-regulated promoter elements and is located downstream of MEKK1 and JNK because co-expression of Grb4 resulted in down-regulation of MEKK1-induced AP-1 activity without affecting JNK activity. Thus, the nuclear pool of Grb4 is likely to mediate this inhibition. Indeed, cell fractionation and fluorescence microscopy studies revealed that the stronger inhibitory potential of the Grb4 SH2 mutant occurred in conjunction with increased nuclear localization of this mutant. Our results suggest a novel role for Grb4 in the inhibition of promitogenic enhancer elements such as 12-O-tetradecanoylphorbol-13-acetate-responsive element and SRE.