The nuclear orphan receptor TAK1/TR4 functions as a positive as well as a negative regulator of transcription; however, little is known about the factors regulating or mediating its activity. Yeast two-hybrid analysis using the ligand-binding domain (LBD) of TAK1 as bait identified a novel TAK1-interacting protein, referred to as TIP27, which functions as a repressor of TAK1-mediated transactivation. TIP27 is a 27 kDa protein containing two zinc finger motifs. Mammalian two-hybrid analysis showed that TIP27 interacts specifically with TAK1 and not with several other nuclear receptors tested. The region between Asp39 and LyS79 of TIP27, referred to as TAK1-interaction domain (TID), is critical for its interaction with TAK1 while the TAK1-LBD from helix 3 until the C-terminus is required for the optimal interaction with TIP27. Pull-down assays demonstrated that the TIP27 physically interacts with TAK1 and supported the critical importance of the TID. Confocal microscopy showed that in the nucleus, TIP27 and TAK1 co-localize. TIP27 acts as a strong repressor of DR1-dependent transcriptional activation by TAK1. This repression does not involve the inhibition of TAK1 homodimerization or DR1 binding but may be due to an effect on co-activator recruitment by TAK1. Our results indicate that TIP27 functions as a TAK1-selective repressor. © Oxford University Press 2004; all rights reserved.