RelA-associated inhibitor (RAI) is an inhibitor of nuclear factor kappaB (NF-kappaB) newly identified by yeast two-hybrid screen as an interacting protein of the p65 (RelA) subunit. In this study, we attempted to examine the effect of RAI on transcription and replication of human immunodeficiency virus type 1 (HIV-1). We found that RAI inhibited gene expression from the HIV-1 long terminal repeat (LTR) even at the basal level. Upon in vitro DNA-binding reactions, RAI could directly block the DNA-binding of p65 subunit of NF-kappaB but not that of the p50 subunit or AP1. We found that RAI could also inhibit the DNA-binding of Sp1 and thus inhibit the basal HIV-1 promoter activity. We further examined the effects of RAI on Sp1 and found that RAI colocalizes with Sp1 in the nucleus and interacts with Sp1 in vitro and in vivo. Moreover, we found that RAI efficiently blocked the HIV-1 replication when cotransfected with a full-length HIV-1 clone. These findings indicate that RAI acts as an efficient inhibitor of HIV-1 gene expression in which both NF-kappaB and Sp1 play major roles.