Mouse mammary tumor virus (MMTV) transcription is repressed by DNA-dependent protein kinase (DNA-PK) through a DNA sequence element, NRE1, in the viral long terminal repeat that is a sequence-specific DNA binding site for the Ku antigen subunit of the kinase. While Ku is an essential component of the active kinase, how the catalytic subunit of DNA-PK (DNA-PK cs ) is regulated through its association with Ku is only beginning to be understood. We report that activation of DNA-PK cs and the repression of MMTV transcription from NRE1 are dependent upon Ku conformation, the manipulation of DNA structure by Ku, and the contact of Ku80 with DNA. Truncation of one copy of the overlapping direct repeat that comprises NRE1 abrogated the repression of MMTV transcription by Ku-DNA-PK cs . Remarkably, the truncated element was recognized by Ku-DNA-PK cs with affinity similar to that of the full-length element but was unable to promote the activation of DNA-PK cs . Analysis of Ku-DNA-PK cs interactions with DNA ends, double-and single-stranded forms of NRE1, and the truncated NRE1 element revealed striking differences in Ku conformation that differentially affected the recruitment of DNA-PK cs and the activation of kinase activity.The long terminal repeat (LTR) of mouse mammary tumor virus (MMTV) includes a complex transcriptional regulatory region that is strongly responsive to steroid hormones and prolactin (5, 6, 13-15, 18, 37, 39, 67, 73, 83). Tumorigenesis is mediated through the insertional activation of cellular protooncogenes (12,42,84). In addition to the promoter-proximal hormone response element and distal prolactin-responsive region, MMTV also contains several DNA sequence elements in the central portion of the LTR that repress or limit virally induced transcription and the response of the virus to steroid hormones (3,51,55,56,76,77,90). At least some of these elements appear to function to restrict virally induced gene expression and tumorigenesis to the lactating mammary gland, where the effects of prolactin and steroid converge to overcome the negative regulatory elements to promote a strong induction of virally induced transcription. Deletion of portions of the viral LTR that include one or more of the negative regulatory sequences deregulates MMTV-induced transcription and leads to virally induced tumors at sites not normally observed with wild-type virus, most notably T-cell lymphoma (40,77,90,91).Studies by several groups have shown that one of the negative regulatory sequences in the MMTV LTR that acts to repress viral transcription occurs in a region between 350 and 400 bp upstream of the viral transcriptional initiation site (21,40,77,85,90). We previously delimited the repressor element within this region, NRE1, to 23 bp of DNA centered over a sequence containing an overlapping direct repeat of the sequence GAGAAAGA (31). NRE1 was shown to inhibit transcription from the MMTV promoter-proximal regulatory region in T cells and in transformed mammary fibroblasts derived from an MMTV-induced tumor (31). De...