In vitro and in vivo evidence suggest that microphthalmia transcription factor (MITF) plays a key regulatory role in tissue-specific gene regulation in several cell types, including melanocytes, osteoclasts, and mast cells. A yeast two-hybrid search, using a portion of a nonmutated MITF gene as the bait in the screening of a mast cell library, resulted in the isolation of the STAT3 inhibitor, PIAS3. PIAS3 is a transcriptional inhibitor that acts by specifically inhibiting STAT3's DNA binding activity. We found that it can directly associate with MITF using an in vitro pull-down assay. Immunoprecipitation of MITF from rat basophilic leukemic cells or mouse melanocytes resulted in the specific co-immunoprecipitation of PIAS3. Co-transfection of MITF with PIAS3 in NIH 3T3 fibroblasts containing an mMCP-6 promoter-luciferase reporter demonstrated up to 94% inhibition of MITF-mediated transcriptional activation. Using a gel-shift assay, it was shown that PIAS3 can block DNA binding activity. It was also found that STAT3 does not interfere, either in vitro or in vivo, with the interaction between PIAS3 and MITF. These data suggest that PIAS3 functions in vivo as a key molecule in supressing the transcriptional activity of MITF, a role of considerable importance in mast cell and melanocyte development.