LAP, a transcriptional activator, and LIP, a transcriptional repressor, are translated from a single mRNA species by using two AUGs within the same reading frame. These two proteins share the 145 C-terminal amino acids that contain the basic DNA-binding domain and the leucine zipper dimerization helix. Probably owing to its higher affinity for its DNA cognate sequences, LIP can attenuate the transcriptional stimulation by LAP in substoichiometric amounts. As revealed by transient transfection experiments, a moderate increase in the LAP/LIP ratio results in a significantly higher transcriptional activation of an appropriate target gene. The LAP/LIP ratio increases about 5-fold during terminal rat liver differentiation and is thus likely to modulate the activity of LAP in the intact animal.