We describe an interaction between homeodomain-interacting protein kinase 1 (HIPK1) and Daxx, two transcriptional regulators important in transducing growth-regulatory signals. We demonstrate that HIPK1 is ubiquitously expressed in mice and humans and localizes predominantly to the nucleus. Daxx normally resides within the nucleus in promyelocytic leukemia protein (PML) oncogenic domains (PODs), where it physically interacts with PML. Under certain circumstances, Daxx is relocalized from PODs to chromatin, where it then acts as a transcriptional repressor through an association with histone deacetylase (HDAC1). We propose two novel mechanisms for regulating the activity of Daxx, both mediated by HIPK1. First, HIPK1 physically interacts with Daxx in cells and consequently relocalizes Daxx from PODs. Daxx relocalization disrupts its interaction with PML and augments its interaction with HDAC1, likely influencing Daxx activity. Although the relocalization of Daxx from PODs is phosphorylation independent, an active HIPK1 kinase domain is required, suggesting that HIPK1 autophosphorylation is important in this interaction. Second, HIPK1 phosphorylates Daxx on Ser 669, and phosphorylation of this site is important in modulating the ability of Daxx to function as a transcriptional repressor. Mutation of Daxx Ser 669 to Ala results in increased repression in three of four transcriptional reporters, suggesting that phosphorylation by HIPK1 diminishes Daxx transcriptional repression of specific promoters. Taken together, our results indicate that HIPK1 and Daxx collaborate in regulating transcription.