Mutations in BRCA1 account for 45% of families with high incidence of breast cancer and for 80-90% of families with both breast and ovarian cancer. BRCA1 protein includes an amino-terminal zinc finger motif as well as an excess of negatively charged amino acids near the C terminus. In addition, BRCA1 contains two nuclear localization signals and localizes to the nucleus of normal cells. While these features suggest a role in transcriptional regulation, no function has been assigned to BRCA1. Here, we show that the C-terminal region, comprising exons 16-24 (aa 1560-1863) of BRCA1 fused to GAL4 DNA binding domain can activate transcription both in yeast and mammalian cells. Furthermore, we define the region comprising exons 21-24 (aa 1760-1863) as the minimal transactivation domain. Any one of four germ-line mutations in the C-terminal region found in patients with breast or ovarian cancer (Ala-1708-->Glu, Gln-1756 C+, Met-1775-->Arg, Tyr-1853 ->Stop), had markedly impaired transcription activity. Together these data underscore the notion that one of the functions of BRCA1 may be the regulation of transcription.