Signaling mediated by the Ras-extracellular signal-regulated kinase (Erk) pathway often leads to the phosphorylation of transcriptional regulators, thereby modulating their activity and causing concerted changes in gene expression. In Drosophila, the induction of multiple Ras-Erk pathway target genes depends on prior phosphorylation of the general co-repressor Groucho, a modification that downregulates its repressive function. Here, we show that TLE1, one of the four human Groucho orthologs, is similarly phosphorylated in response to Ras-Erk pathway activation, and that this modification attenuates its capacity to repress transcription. Specifically, unphosphorylated TLE1 dominantly suppresses the induction of Ras-Erk pathway target genes in cultured human cells, and the expression of an unphosphorylatable TLE1 derivative causes severe phenotypes in a transgenic Drosophila model system, whereas a phosphomimetic variant of TLE1 exerts only negligible effects. We present data indicating that TLE1 is rapidly excluded from the nucleus following epidermal growth factor receptor pathway activation, an effect that likely accounts for its inability to mediate effective repression under such conditions. Significantly, we find that unphosphorylated TLE1 blocks oncogenic phenotypes induced by mutated H-Ras in human mammary cells, both in vitro and following their implantation in mice. Collectively, our data strongly indicate that phosphorylation of TLE family members and the consequent downregulation of their repressor function is a key conserved step in the transcriptional responses to Ras-Erk signaling, and possibly a critical event in the tumorigenic effects caused by excessive Ras-Erk pathway activity.