Several different transcription factors, including estrogen receptor, progesterone receptor, and ETS family members, have been implicated in human breast cancer, indicating that transcription factor-induced alterations in gene expression underlie mammary cell transformation. ESE-1 is an epithelium-specific ETS transcription factor that contains two distinguishing domains, a serine-and aspartic acid-rich (SAR) domain and an AT hook domain. ESE-1 is abundantly expressed in human breast cancer and trans-activates epitheliumspecific gene promoters in transient transfection assays. While it has been presumed that ETS factors transform mammary epithelial cells via their nuclear transcriptional functions, here we show (i) that ESE-1 protein is cytoplasmic in human breast cancer cells; (ii) that stably expressed green fluorescent protein-ESE-1 transforms MCF-12A human mammary epithelial cells; and (iii) that the ESE-1 SAR domain, acting in the cytoplasm, is necessary and sufficient to mediate this transformation. Deletion of transcriptional regulatory or nuclear localization domains does not impair ESE-1-mediated transformation, whereas fusing the simian virus 40 T-antigen nuclear localization signal to various ESE-1 constructs, including the SAR domain alone, inhibits their transforming capacity. Finally, we show that the nuclear localization of ESE-1 protein induces apoptosis in nontransformed mammary epithelial cells via a transcription-dependent mechanism. Together, our studies reveal two distinct ESE-1 functions, apoptosis and transformation, where the ESE-1 transcription activation domain contributes to apoptosis and the SAR domain mediates transformation via a novel nonnuclear, nontranscriptional mechanism. These studies not only describe a unique ETS factor transformation mechanism but also establish a new paradigm for cell transformation in general.ETS transcription factors play crucial roles in several different biological processes, including differentiation and tumorigenesis (36, 41). All ETS factors are characterized by a conserved winged helix-turn-helix DNA binding domain (DBD), the ETS domain, which mediates binding to ets consensus sites in target genes. ETS proteins, which function as activators and/or repressors of gene transcription, can be regulated by both protein-protein interactions and mitogen-activated protein kinase (MAPK)-mediated phosphorylation (36, 41). For example, members of at least six different ETS factor subfamilies are key nuclear effectors of the Ras/Raf/MAPK pathway, serving as direct targets of MAPK phosphorylation and thus playing critical regulatory roles in cell survival and proliferation (36,41,50).Multiple lines of evidence support a causative role for ETS factors in carcinogenesis (19,36,41). The founding member of the ETS family, the v-ETS oncogene, causes hematopoetic malignancies in chickens (27). ETS factors are also associated with malignancies in humans. For example, chromosomal translocations in which the amino-terminal region of EWS is fused to the carboxy-terminal ...