Our studies originally demonstrated that the v-rel oncoprotein repressed gene expression in chicken lymphoid cells, while it activated transcription in rodent fibroblasts. Here we report that the c-rel protein can activate expression of genes linked to kappa B motifs when low levels of endogenous kappa B-binding activity are present. In contrast v-rel, and to a lesser extent c-rel, inhibit NF-kappa B-mediated activation of the human immunodeficiency virus long terminal repeat (HIV LTR) in phorbol ester-stimulated HeLa cells. Competition assays show that v-rel competitively inhibits both NF-kappa B and c-rel-mediated transcriptional activation. Analysis of mutant HIV LTR-chloramphenicol acetyltransferase (CAT) constructs in which all Sp1 or both NF-kappa B elements have been deleted shows that NF-kappa B motifs are required for rel-mediated effects on gene expression. Transforming v-rel mutants compete efficiently with phorbol ester-activated kappa B factors, whereas a transformation-defective mutant of v-rel is impaired in this activity. Taken together, these results strengthen the hypothesis that v-rel functions as a dominant interfering member of rel family proteins. These results also suggest that the ability of v- and c-rel to activate or repress gene expression in specific cells may result from their capacity to compete with endogenous rel family proteins whose expression and/or activity are cell-specific.