The WT1 tumor suppressor gene encodes four isoforms of a zinc finger transcription factor with both activation and repression functions which are dependent upon promoter architecture. Using a simple HSV-tk promoter containing 5'-Egr-1/WT1-binding sites, we found that WT1 isoforms (A) and (B) strongly activated transcription. WT1(A) and (B) bound equally well to the Egr-1/WT1-binding site, but WT1(B), which contains a 17 amino acid insertion compared to WT1(A), was a consistently stronger activator of transcription than WT1(A). Transcriptional activation by wild-type WT1 was inhibited by coexpression of WT(PM) or WT(AR), genetically defined dominant negative alleles of WT1. In vitro, as well as in the yeast two-hybrid system, WT1 protein associated with itself and with dominant negative mutant proteins. The major domain required for self-association and inhibition of transcriptional activation mapped to the first 182 amino acids of WT1. Dominant negative WT1 alleles may play a role in tumorigenesis by associating with wild-type WT1 proteins and decreasing their transcriptional activity.