The Myc protein binds to and transactivates the expression of genes via E-box elements containing a central CAC(G/A)TG sequence. The transcriptional activation function of Myc is required for its ability to induce cell cycle progression, cellular transformation and apoptosis. Here we show that transactivation by Myc is under negative control by the transcription factor AP-2. AP-2 inhibits transactivation by Myc via two distinct mechanisms. First, high affinity binding sites for AP-2 overlap Myc-response elements in two bona fide target genes of Myc, prothymosin-alpha and ornithine decarboxylase. On these sites, AP-2 competes for binding of either Myc/Max heterodimers or Max/Max homodimers. The second mechanism involves a specific interaction between C-terminal domains of AP-2 and the BR/HLH/LZ domain of Myc, but not Max or Mad. Binding of AP-2 to Myc does not preclude association of Myc with Max, but impairs DNA binding of the Myc/Max complex and inhibits transactivation by Myc even in the absence of an overlapping AP-2 binding site. Taken together, our data suggest that AP-2 acts as a negative regulator of transactivation by Myc.