Exon trapping and cDNA selection procedures were used to search for novel genes at human chromosome 11p13, a region previously associated with loss of heterozygosity in epithelial carcinomas. Using these approaches, we found the ESE-2 and ESE-3 genes, coding for ETS domain-containing transcription factors. These genes lie in close proximity to the catalase gene within a approximately 200-kilobase genomic interval. ESE-3 mRNA is widely expressed in human tissues with high epithelial content, and immunohistochemical analysis with a newly generated monoclonal antibody revealed that ESE-3 is a nuclear protein expressed exclusively in differentiated epithelial cells and that it is absent in the epithelial carcinomas tested. In transient transfections, ESE-3 behaves as a repressor of the Ras- or phorbol ester-induced transcriptional activation of a subset of promoters that contain ETS and AP-1 binding sites. ESE-3-mediated repression is sequence- and context-dependent and depends both on the presence of high affinity ESE-3 binding sites in combination with AP-1 cis-elements and the arrangement of these sites within a given promoter. We propose that ESE-3 might be an important determinant in the control of epithelial differentiation, as a modulator of the nuclear response to mitogen-activated protein kinase signaling cascades.