The mouse mammary tumor virus (MMTV) retrovirus causes mammary adenocarcinomas in mice by proviral insertion near members of the wnt family of proto-oncogenes, leading to their deregulation and cellular transformation. The 5' end of the MMTV long terminal repeat (LTR) has been implicated in tissue-specific activation of these genes. In this study, we characterize an enhancer element (Ban2; -1075 to -978) at the 5' end of the MMTV LTR. We show that this enhancer is 5-fold more active in a murine mammary carcinoma cell line (34i) than in a fibroblast cell line (NIH3T3), and is inactive in the liver carcinoma cell line HepG2. Mutagenesis of the enhancer reveals four cis-acting elements that are required for maximal activity. DNA-binding proteins that interact with each of the four elements have been identified. One of these factors, designated mp5, is either identical to, or closely related to, the transcription factor AP-2. The mp5/AP-2 DNA binding activity co-migrates with recombinant AP-2 and is supershifted by anti-AP-2 antibodies. We also show that the lack of enhancer activity in HepG2 cells results from the absence of AP-2 protein in these cells. Co-transfection of an AP-2 expression vector restores the activity of this enhancer in HepG2 cells, and requires an intact mp5-binding site.