Ectopic production of the EVI1 transcriptional repressor zinc finger protein is seen in 4--6% of human acute myeloid leukemias. Overexpression also transforms Rat1 fibroblasts by an unknown mechanism, which is likely to be related to its role in leukemia and which depends upon its repressor activity. We show here that mutant murine Evi-1 proteins, lacking either the N-terminal zinc finger DNA binding domain or both DNA binding zinc finger clusters, function as dominant negative mutants by reverting the transformed phenotype of Evi-1 transformed Rat1 fibroblasts. The dominant negative activity of the non-DNA binding mutants suggests sequestration of transformation-specific cofactors and that recruitment of these cellular factors might mediate Evi-1 transforming activity. C-terminal binding protein (CtBP) co-repressor family proteins bind PLDLS-like motifs. We show that the murine Evi-1 repressor domain has two such sites, PFDLT (site a, amino acids 553--559) and PLDLS (site b, amino acids 584--590), which independently can bind CtBP family co-repressor proteins, with site b binding with higher affinity than site a. Functional analysis of specific CtBP binding mutants show site b is absolutely required to mediate both transformation of Rat1 fibroblasts and transcriptional repressor activity. This is the first demonstration that the biological activity of a mammalian cellular transcriptional repressor protein is mediated by CtBPs. Furthermore, it suggests that CtBP proteins are involved in the development of some acute leukemias and that blocking their ability to specifically interact with EVI1 might provide a target for the development of pharmacological therapeutic agents.