The Wilms' tumor suppressor protein WT1 is a transcriptional regulator involved in differentiation and the regulation of cell growth. WT1 is subject to alternative splicing, one isoform including a 17-amino acid region that is specific to mammals. The function of this 17-amino acid insertion is not clear, however. Here, we describe a transcriptional activation domain in WT1 that is specific to the WT1 splice isoform that contains the 17-amino acid insertion. We show that the function of this domain in transcriptional activation is dependent on a specific interaction with the prostate apoptosis response factor par4. A mutation in WT1 found in Wilms' tumor disturbs the interaction with par4 and disrupts the function of the activation domain. Analysis of WT1 derivatives in cells treated to induce par4 expression showed a strong correlation between the transcription function of the WT1 17-amino acid insertion and the ability of WT1 to regulate cell survival and proliferation. Our results provide a molecular mechanism by which alternative splicing of WT1 can regulate cell growth in development and disease.