Murine OASIS is a putative CREB/ATF family transcription factor that is induced in gliosis, but its molecular role has not been determined. We have isolated the human OASIS gene and investigated the potential of OASIS protein as a transcriptional activator. We found that OASIS can activate transcription through box-B elements but not through the somatostatin CRE. OASIS contains a putative C-terminal hydrophobic transmembrane domain, a typical structural feature for the transcription factors activated by regulated intramembrane proteolysis. Truncation of the OASIS transmembrane domain resulted in a significant increase in transcriptional activity and altered its subcellular localization from the endoplasmic reticulum to the nucleus. Western blot analysis of transfected cells identified OASIS polypeptides of 82 and 66 kDa. These results suggest that the transmembrane domain plays an important role in the regulation of transcriptional activation by OASIS.