In addition to playing a crucial role in the pathogenesis of AIDS, HIV nef induces down-regulation of CD4 expression and TCR signaling and also regulates the sorting pathway in host T cells. To elucidate the Nef function in HIV progression, we searched for a cellular component which interacts with Nef. A human cDNA encoding a novel acyl-CoA thioesterase (hACTE-III) was isolated as an HIV nef-binding protein by yeast two-hybrid system. hACTE-III is homologous to E. coli thioesterase II but to none of the mammalian thioesterases and therefore belongs to a new type. hACTE-III exhibits enzymatic specificity for a broad range of fatty acyl-CoAs. The hACTE-III-binding region within Nef is localized in the central region (amino acids 109-152). hACTE-III greatly enhances its enzymatic activity upon direct binding to Nef. Considering that either Nef-overexpression or impaired fatty acid regulation induces alteration of subcellular morphology, the augmented hACTE-III function by Nef-binding might induce dysfunction of T cells.