The evolutionarily conserved Ras/mitogen-activated protein kinase (MAPK) cascade is an integral part of the processes of cell division, differentiation, movement and death. Signals received at the cell surface are relayed into the nucleus, where MAPK phosphorylates and thereby modulates the activities of a subset of transcription factors. Here we report the cloning and characterization of a new component of this signal transduction pathway called Mae (for modulator of the activity of Ets). Mae is a signalling intermediate that directly links the MAPK signalling pathway to its downstream transcription factor targets. Phosphorylation by MAPK of the critical serine residue (Ser 127) of the Drosophila transcription factor Yan depends on Mae, and is mediated by the binding of Yan to Mae through their Pointed domains. This phosphorylation is both necessary and sufficient to abrogate transcriptional repression by Yan. Mae also regulates the activity of the transcriptional activator Pointed-P2 by a similar mechanism. Mae is essential for the normal development and viability of Drosophila, and is required in vivo for normal signalling of the epidermal growth factor receptor. Our study indicates that MAPK signalling specificity may depend on proteins that couple specific substrates to the kinase.