ATF6 is a 670-amino acid endoplasmic reticulum (ER) transmembrane protein that is cleaved in response to ER stress. The resulting N-terminal fragment of approximately 400 amino acids translocates to the nucleus and activates selected ER stress-inducible genes, such as GRP-78 and sarco/endoplasmic reticulum ATPase, which are required for cell survival. In studying the mechanism of ATF6-activated transcription, we found that when HeLa cells were transfected with a plasmid encoding ATF6-(1-373), ER stress-inducible reporter gene activation was high, but ATF6-(1-373) expression was low, unless a proteasome inhibitor was added. In contrast, transfection with a plasmid encoding ATF6-(94-373) resulted in low reporter activation and high expression of ATF6-(94-373), which was independent of the proteasome inhibitor. Thus, the information responsible for transcriptional activation and proteasomal degradation must lie within the N-terminal 93 amino acids of ATF6. This portion of ATF6 was found to be homologous to the herpes simplex viral protein, VP16. One 8-amino acid domain of particular interest in this region of ATF6 is 75% identical to the VN8 region in VP16. VN8 is required for VP16-mediated transcription, as well as rapid degradation of VP16 by proteasomes. Point mutations in the VN8-like region of ATF6 caused a loss of transcription, increased expression levels, and an increase in half-life. Thus, the potent transcriptional activities and rapid degradation of ATF6 and VP16 require the VN8 domains in each protein. Homology searches indicate that ATF6 is the only eukaryotic protein known that possesses an active VN8 domain, raising questions about how this domain evolved and the functional importance underlying its appearance in only these two transcription factors.