PRDI-BFc and PRDI-BFi are proteins that bind specifically to a regulatory element required for virus induction of the human beta interferon (IFN-beta). PRDI-BFc is a constitutive binding activity, while the PRDI-BFi binding activity is observed only after cells are treated with inducers such as virus or poly(I).poly(C) plus cycloheximide or in some cells by cycloheximide alone. In this paper we report that PRDI-BFc is interferon regulatory factor-2 (IRF-2), a known transcriptional repressor. In addition, we find that PRDI-BFi is a truncated form of IRF-2, lacking approximately 185 C-terminal amino acids. Thus, PRDI-BFi appears to be generated by inducible proteolysis. Although the affinity of PRDI-BFc/IRF-2 for the IFN-beta promoter does not appear to be affected by the removal of C-terminal amino acids, the ability of PRDI-BFi to function as a repressor in cotransfection experiments is significantly less than that of intact IRF-2. Studies have shown that IRF-2 can block the activity of the transcriptional activator IRF-1, which also binds specifically to the IFN-beta gene promoter. Thus, the inducible proteolysis of IRF-2 may be involved in the regulation of the IFN-beta gene or of other genes in which the ratio of IRF-1 to IRF-2 can affect the level of transcription.