The retinoblastoma protein (Rb) acts as a critical cell-cycle regulator and loss of Rb function is associated with a variety of human cancer types. Here we report that Rb binds to members of the AP-1 family of transcription factors, including c-Jun, and stimulates c-Jun transcriptional activity from an AP-1 consensus sequence. The interaction involves the leucine zipper region of c-Jun and the B pocket of Rb as well as a C-terminal domain. We also present evidence that the complexes are found in terminally differentiating keratinocytes and cells entering the G1 phase of the cell cycle after release from serum starvation. The human papillomavirus type 16 E7 protein, which binds to both c-Jun and Rb, inhibits the ability of Rb to activate c-Jun. The results provide evidence of a role for Rb as a transcriptional activator in early G1 and as a potential modulator of c-Jun expression during keratinocyte differentiation.