We previously reported that induced activator protein‐1 (AP‐1) transcriptional activity appears to be required for tumor promoter–induced transformation in mouse epidermal JB6 cells. To extend this investigation to a keratinocyte culture model and a transgenic mouse model, we constructed K14TAM67, a keratin 14 promoter–controlled version of the dominant negative jun mutant to directly block AP‐1 activity and possibly indirectly block NFκB activity in basal squamous epithelia. This study was directed at characterizing TAM67 expression and biological activity in the mouse cell line 308, a keratinocyte model for studying carcinogenesis. Cotransfection of K14TAM67 with luciferase plasmid reporter DNAs produced inhibition of basal and 12‐O‐tetradecanoylphorbol‐13‐acetate (TPA)–induced AP‐1 and NFκB activity but had no effect on p53‐dependent transcriptional activity. In an in vitro invasion assay, stable expression of TAM67 in 308 cells blocked TPA‐induced Matrigel invasion. This suggests that blocking TPA‐induced AP‐1– or NFκB‐regulated gene expression by TAM67 inhibits TPA‐induced progression. Recombinant tissue inhibitor of metalloproteinase 1 reduced TPA‐induced in vitro invasion, thus implicating metalloproteinases at least in part in the transcription factor–dependent process. Analysis of mRNA levels for members of the matrix metalloproteinase (MMP) family, however, revealed that the expression of any single MMP family member did not correlate with regulation of AP‐1 or NFκB activity. However, the combination of substantial levels of mRNA for stromelysin‐1, stromelysin‐2, collagenase, membrane type 1 MMP, and gelatinase A occurred only in TPA‐treated cells in the absence of TAM67. These results suggest that the action of the dominant negative jun mutant on AP‐1 and NFκB gene regulation results in complex alterations in the levels of downstream effector genes, such as the metalloproteinases, that effect TPA‐induced cellular invasion. Mol. Carcinog. 19:204–212, 1997. © 1997 Wiley‐Liss, Inc.