CCAAT enhancer binding protein beta (C/EBPbeta) plays an essential role in the cascade that triggers adipocyte differentiation. C/EBPbeta activates transcription of C/EBPalpha and peroxisome proliferator-activated receptor-gamma, transcriptional activators of genes that give rise to the adipocyte phenotype. Sequential phosphorylation of C/EBPbeta/liver activating protein (LAP) on Thr(188) by MAPK and on Ser(184) or Thr(179) by glycogen synthase kinase beta (GSK3beta) is required for acquisition of DNA binding activity and transcriptional activation. To investigate how phosphorylation and dimerization of C/EBPbeta/LAP alter these activities, wild-type (Wt) and mutant rC/EBPbetas were prepared and purified to assess DNA binding and transcription in cell-free systems. rC/EBPbeta/LAP, phosphorylated by MAPK and GSK3beta in vitro, produced a >100-fold increase in DNA binding activity. Mutation of the phosphorylation to Glu increased DNA binding activity. Using a cell-free transcription system with nuclear extract from 3T3-L1 preadipocytes and rC/EBPbeta/LAP, only doubly phosphorylated rC/EBPbeta/LAP (by MAPK and GSK3beta) activated transcription driven by Wt C/EBPalpha, 422/aP2, and SCD1 promoters. Oxidation-induced dimerization of doubly phosphorylated Wt rC/EBPbeta/LAP increased DNA binding, whereas unphosphorylated Wt rC/EBPbeta/LAP lacked DNA binding activity. Mutation of the C-terminal Cys(296) adjacent to the leucine zipper and Cys(143) just upstream of the DNA binding domain eliminated phosphorylation-, oxidation-, and dimerization-dependent DNA binding activity, whereas mutation of Cys(201) within the basic DNA binding domain had little effect on DNA binding. These findings indicate that dual phosphorylation of C/EBPbeta/LAP caused a conformational change that facilitates S-S bond formation and dimerization, rendering the basic region accessible to the C/EBP regulatory element.