We have discovered that the orphan receptor DAX-1 (NROB1) interacts with the estrogen receptors ERalpha and ERbeta. Interaction occurs with ligand-activated ERs in solution and on DNA and is mediated by the unique DAX-1 N-terminal repeat domain. Each of the three repeats contains a leucine-rich receptor-binding motif, known as the LXXLL motif, which is usually found in nuclear receptor coactivators. We have demonstrated that DAX-1 functions as an inhibitor of ER activation in mammalian cells and suggest a mechanism involving two sequential events, occupation of the ligand-induced coactivator-binding surface and subsequent recruitment of corepressors. Accordingly, we propose that DAX-1 itself acts as a corepressor for ERs. Because DAX-1 is coexpressed with ERs in reproductive tissues, these interactions could play significant roles by influencing estrogen signaling pathways. Our results point at functional similarities between DAX-1 and the orphan receptor SHP (NROB2) in that they have acquired features of transcriptional coregulators that are unique for members of the nuclear receptor family.