Reactivation in Epstein-Barr virus (EBV) is closely associated with a G(0)/G(1) cell cycle arrest which can be induced either by lytic cycle-inducing agents or by the immediate-early gene product Zta. Accumulating evidence shows that in epithelial cells, downregulation of the proto-oncogene, c-myc, plays an important role in lytic cycle-associated cell growth arrest. Here, we provide evidence that c-Myc provides a gatekeeper function to ensure that certain cell cycle inhibitory events have been capitulated prior to full progression into the lytic cycle. Specifically, we show that reconstitution of c-Myc expression during the lytic cycle to levels observed in cycling uninduced cells inhibits the transactivation function of Zta. Nuclear localization studies show that c-Myc does not grossly alter the nuclear localization of Zta or its association with the insoluble nuclear fraction. Enforced expression of another transcription factor that promotes cell cycle progression, E2F1, also inhibits Zta transactivation. Analysis of c-Myc- and E2F1-mediated inhibition of a panel of Zta mutants shows parallel genetics and inhibition maps to a small bipartite sequence located between amino acids 29 and 53 of Zta, containing homology to the proline-rich domain of the tumor suppressor protein p53. Mutation of a conserved tryptophan residue located at amino acid 49 of Zta largely prevents inhibition by both c-Myc and E2F1. These studies identify a negative regulatory element within the Zta activation domain that is regulated by the cell cycle-promoting factors c-Myc and E2F1.