We examined genome-wide differences in gene expression between tumor biopsies and normal tissues in order to identify differentially regulated genes in tumors. Cancer-upregulated gene 2 (CUG2) was identified as an expressed sequence tag (EST) that exhibits significant differential expression in multiple human cancer types. CUG2 showed weak sequence homology with the down-regulator of transcription 1 (DR1) gene, a human transcription repressor. We found that EGFP-CUG2 fusion proteins were predominantly localized in the nucleus, suggesting their putative role in gene regulation. In addition, CUG2-overexpressing mouse fibroblast cells exhibited distinct cancer-specific phenotypes in vitro and developed into tumors in nude mice. Taken together, these findings suggest that CUG2 is a novel tumor-associated gene that is commonly activated in various human cancers and exhibits high transforming activities; it possibly belongs to a transcription regulator family that is involved in tumor biogenesis.