The zinc finger protein early growth response 1 (Egr-1) is a transcriptional activator involved in the regulation of growth and differentiation. Egr-1 has a large activating domain and three zinc finger motifs that function as a DNA binding region. We show here that a third functional domain of the Egr-1 protein, localized between the extended activation domain and the zinc finger DNA binding region, acts as a transcriptional repressor domain when fused to a heterologous DNA binding domain (DBD). Through protein-protein interaction this inhibitory domain of Egr-1 brings the transcriptional corepressor NAB1 in close proximity to the transcription unit. NAB1 is expressed ubiquitously in human cell lines as shown by RNase protection mapping. Overexpression studies revealed that NAB1 is able to completely block transcription mediated by Egr-1. In addition, the transcriptional repression activity of a fusion protein containing the inhibitory domain of Egr-1 and the DBD of the yeast transcription factor GAL4 was increased by overexpression of NAB1. A fusion protein consisting of the DBD of GAL4 and the coding region of human NAB1 repressed transcription from model promoters with engineered upstream GAL4 binding sites. The GAL4-NAB1 fusion protein functioned from proximal and distal positions indicating that NAB1 displays transcriptional repressor activity at any position within the transcription unit. Thus, the biological function of the inhibitory domain of Egr-1 is solely to provide a docking site for NAB1 via protein-protein interaction.