Induction of phase 2 detoxification enzymes by phenolic antioxidants can account for prevention of tumor initiation but cannot explain why these compounds inhibit tumor promotion. Phase 2 genes are induced through an antioxidant response element (ARE). Although the ARE resembles an AP-1 binding site, we show that the major ARE binding and activating protein is not AP-1. Interestingly, AP-1 DNA binding activity was induced by the phenolic antioxidant tert-butylhydroquinone (BHQ), but the induction of AP-1 transcriptional activity by the tumor promoter 12-O-tetradecanoylphorbol 13-acetate (TPA) was inhibited by this compound. BHQ induced expression of c-jun, junB, fra-1, and fra-2, which encode AP-1 components, but was a poor inducer of c-fos and had no effect on fosB. Like c-Fos and FosB, the Fra proteins heterodimerize with Jun proteins to form stable AP-1 complexes. However, Fra-containing AP-1 complexes have low transactivation potential. Furthermore, Fra-1 repressed AP-1 activity induced by either TPA or expression of c-Jun and c-Fos. We therefore conclude that inhibitory AP-1 complexes composed of Jun-Fra heterodimers, induced by BHQ, antagonize the transcriptional effects of the tumor promoter TPA, which are mediated by Jun-Fos heterodimers. Since AP-1 is an important mediator of tumor promoter action, these findings may explain the anti-tumor-promoting activity of phenolic antioxidants.