We describe a novel basic leucine zipper containing type I IFN-inducible early response gene SARI (Suppressor of AP-1, Regulated by IFN). Steady-state SARI mRNA expression was detected in multiple lineage-specific normal cells, but not in their transformed/tumorigenic counterparts. In normal and cancer cells, SARI expression was induced 2 h after fibroblast IFN (IFN-beta) treatment with 1 U/ml of IFN-beta. Antisense inhibition of SARI protected HeLa cells from IFN-beta-mediated growth inhibition. As a corollary, overexpression of SARI inhibited growth and induced apoptosis in cancer cells, but not in normal cells. SARI interacted with c-Jun via its leucine zipper, resulting in inhibition of DNA binding of activator protein (AP-1) complex and consequently AP-1-dependent gene expression. Transformed cells relying on AP-1 activity for proliferative advantage demonstrated increased susceptibility to SARI-mediated growth inhibition. These findings uncover a novel mode of IFN-induced anti-tumor growth suppression and suggest potential gene therapy applications for SARI.