We have previously shown that expression of the E1A oncogene is negatively regulated in rodent fibroblast cells by a nuclear factor (phi AP3) that binds to the E1A promoter region just upstream of the canonical enhancer element. To understand how phi AP3 can regulate E1A gene transcription by inactivation of the enhancer function, we have used an oligonucleotide probe containing a binding site for this protein to clone the mouse phi AP3 gene. DNA sequence analysis of the 2.3 kb cDNA revealed the presence of six well-conserved zinc finger DNA-binding motifs, which were highly related to those found in the GLI-Kruppel family of human zinc finger proteins. Analysis of the tissue distribution of the phi AP3 mRNA suggested that its expression was ubiquitous but at variable levels, most likely as a result of post-transcriptional regulation of mRNA stability. The phi AP3 factor is a nuclear phosphoprotein; the extent of its phosphorylation is regulated during the cell cycle. Preferential binding of the hyperphosphorylated form of this protein to DNA was observed. Co-expression of the phi AP3 cDNA and a luciferase reporter gene under the control of the E1A promoter/enhancer in several human cell lines resulted in repression of E1A enhancer activity. In contrast, when the phi AP3 binding site upstream of the enhancer was mutated, no inhibition of enhancer function was observed. Based on these observations we conclude that we have cloned the cellular phi AP3 gene, and that the DNA-binding activity of this protein is regulated during the cell cycle.