A conserved region, designated the AD1 domain, is present in a class of helix-loop-helix (HLH) proteins, E proteins, that includes E12, E47, HEB, E2-2, and a Xenopus laevis HLH protein closely related to E12. We demonstrate that the AD1 domain in E2A and the conserved region of E2-2 activate transcription in both yeast and mammalian cells. The AD1 domain contains a highly conserved putative helix that is crucial for its transactivation properties. Circular dichroism spectroscopy data show that AD1 is structured and contains distinctive helical properties. In addition, we show that a synthetic peptide corresponding to the conserved region is unstructured in aqueous solution at neutral pH but can adopt an alpha-helical conformation in the presence of the hydrophobic solvent trifluoroethanol. Amino acid substitutions that destabilize the helix abolish the transactivation ability of the AD1 domain. Both structural and functional analyses of AD1 reveal striking similarities to the acidic class of activators. Remarkably, when wild-type and mutant proteins are expressed in mammalian cells and Saccharomyces cerevisiae, identical patterns of transactivation are observed, suggesting that the target molecule is conserved between S. cerevisiae and mammals. These data show that transactivation by E proteins is mediated, in part, by a strikingly conserved peptide that has the ability to form a helix in a hydrophobic solvent. We propose that the unstructured domain may become helical upon interaction with its cellular target molecule.