Glial factor 1 (GF-1) is a partial cDNA isolated from a human brain cDNA library which encodes a truncated protein with binding ability to the B-regulatory domain of the human neurotropic virus, JCV. GF-1 exhibits sequence homology to the central region of the newly identified human DNA-binding protein S(mu)bp-2. GF-1 appears to be a partial cDNA for human S(mu)bp-2 based on its sequence homology to S(mu)bp-2 and their chromosomal co-localization. In this report, we have employed transfection assay and have compared the ability of GF-1 and its full-length form, S(mu)bp-2, on regulating the activity of JCV promoters in glial cells. Our results demonstrate that, unlike GF-1 which stimulates JCV early promoter in glial cells, overexpression of S(mu)bp-2 exhibits no drastic effect on the transcription of the viral early promoter. The activity of the viral late promoter was noticeably increased by both GF-1 and S(mu)bp-2, although the level of induction by GF-1 was consistently higher than that detected by S(mu)bp-2. Use of deletion constructs in co-transfection assay revealed that the B-domain of the JCV promoter is required for transcriptional activation by GF-1 and S(mu)bp-2. Expression of GF-1 and S(mu)bp-2 in glial cells increased the induced level of JCV late gene transcription by the viral early protein, T-antigen. Examination of the viral DNA replication by DpnI assay indicated that, unlike GF-1, S(mu)bp-2 has the ability to decrease the level of JCV DNA replication in glial cells. These observations suggest that the N-terminal portion of S(mu)bp-2 which encompasses several helicase motifs and/or its C-terminus, both of which are missing in GF-1, may confer differential effects on viral gene transcription and replication. The biological importance of our findings in regulation of the JCV lytic cycle in glial cells is discussed.