Eukaryotic gene transcription is regulated by sequence-specific transcription factors, which bind modular cis acting promoter and enhancer elements. The cAMP response element (CRE) consists of the palindromic octanucleotide TGACGTCA. There are several CRE binding proteins within the ATF/CREB family, including CREB-1, CREB-2 (also designated ATF-4), ATF-1, ATF-2 and ATF-3. A novel basic leucine zipper (bZIP) protein, designated ATF-7, is closely related to members of the ATF/CREB family of bZIP proteins, with highest homology to ATF-4. ATF-7 physically interacts with the PRL-1 protein-tyrosine phosphatase (PTPase), which is a predominately nuclear, farnesylated PTPase. ATF-7 homodimers bind specifically to CRE elements. ATF-7 is expressed in a number of different tissues and is expressed in association with differentiation. ATF-7 and PRL-1 interact with each other through the bZIP region of ATF-7 and the phosphatase domain of PRL-1. In addition, PRL-1 is able to dephosphorylate ATF-7 in vitro.