The retinoblastoma susceptibility gene (Rb) is a tumor suppressor gene involved in the etiology of many types of human cancers. However, the molecular mechanisms involved in tumor suppression by Rb are largely unknown. The neu gene is a dominant transforming oncogene and a member of the growth factor receptor tyrosine kinase gene family. Both inactivation of the Rb gene and overexpression of the neu gene are involved in human breast and lung cancers. Therefore, it is of interest and importance to investigate the potential interactions between Rb and neu. Here we show that Rb suppresses neu-induced transformation by focus formation assays. This transformation suppression by Rb was further shown to be due to transcriptional repression of neu using Rb expressing effector plasmid and neu promoter-chloramphenicol acetyltransferase reporter gene. The cis-acting element conferring Rb-mediated repression was mapped to a recently identified novel enhancer in the neu promoter. The data indicate that the growth factor receptor neu is a target for the Rb gene product and transcriptional repression of a dominant oncogene expression may be one of the molecular mechanisms of Rb-mediated tumor suppression.