Pip is a lymphoid-restricted IRF transcription factor that is recruited to composite elements within immunoglobulin light-chain gene enhancers through a specific interaction with the Ets factor PU.1. We have examined the transcriptional regulatory properties of Pip as well as the requirements for its interaction with PU.1 and DNA to form a ternary complex. We demonstrate that Pip is a dichotomous regulator; it specifically stimulates transcription in conjunction with PU.1, but represses alpha/beta-interferon-inducible transcription in the absence of PU.1. Thus, during B-cell activation and differentiation, Pip may function both as an activator to promote B cell-specific gene expression and as a repressor to inhibit the antiproliferative effects of alpha/beta-interferons. Mutational analysis of Pip reveals a carboxy-terminal segment that is important for autoinhibition of DNA binding and ternary complex formation. A domain of Pip containing this segment confers autoinhibition and PU.1-dependent binding activity to the DNA-binding domain of the related IRF family member, p48. On the basis of these and other data we propose a model for PU.1/Pip ternary complex formation.