Functional inactivation of the tumor-suppressing retinoblastoma gene (Rb) is involved in the etiology of many types of human cancers, including hereditary retinoblastomas. The neu gene is a dominant transforming oncogene, and we previously found that the Rb-encoded protein (RB) suppresses neu-induced transformation in NIH3T3 cells by repressing transcription of the neu oncogene. We report here that RB was unable to repress neu oncogene transcription in Rat-1 cells but could functionally antagonize transcriptional repression of neu by the adenovirus E1A. Mutant forms of RB that have mutations in either the E1A-binding or carboxy-terminal regions had less or no antagonizing effects on E1A-mediated repression of neu in Rat-1 cells. Results of focus-formation assays showed that the transformation activity of the neu oncogene in Rat-1 cells could be regulated by E1A and RB in accordance with their transcriptional regulation activities. The data demonstrate that RB can regulate transcription of neu in a negative or positive manner depending on the cell type. Carboxy terminus of RB as well as the E1A-binding region can mediate transcriptional regulation. Based on these results, we propose a model for the complex transcriptional regulation of neu by RB and E1A.