c-Rel is overexpressed in several B-cell lymphomas and c-rel gene overexpression can transform primary chicken lymphoid cells and induce tumors in animals. Although c-Rel is generally a stronger transcriptional activator than its viral derivative v-Rel, its oncogenic activity is significantly weaker. Among the mutations acquired during c-Rel's evolution into v-Rel are deletion of c-Rel's transactivation domain 2 (cTAD2) and mutations in cTAD1. Given the critical role of the Rel TADs in cell transformation, we investigated how mutations in c-Rel's cTAD1 and cTAD2 contribute to its oncogenicity and that of v-Rel. Mutations in cTAD2 noticeably increased c-Rel's transforming activity by promoting its nuclear localization and gene-specific transactivation, despite an overall decrease in kappaB site-dependent transactivation potency. Conversely, substitution of vTAD by cTAD1 increased v-Rel's transactivation and transforming efficiencies, whereas its substitution by the stronger cTAD2 compromised activation of mip-1beta but not irf-4 and was detrimental to cell transformation. These results suggest that the Rel TADs differentially contribute to gene-specific activation and that an optimal range of transcription potency is necessary for efficient transformation. These findings may have important implications for understanding how Rel TAD mutations can lead to a more oncogenic phenotype.