PU.1 and Pax5 are important regulators of immunoglobulin heavy-chain (IgH) gene expression in B lineage cells. We have previously shown that PU.1 can potentiate the transcription of an IgH HS1,2 enhancer-linked reporter gene, and that Pax5 represses the same enhancer in transient transfection assays. Here we report that PU.1, like Pax5, can recruit and physically interact with a member of the Groucho family of co-repressors, Grg4. As a consequence, PU.1 in conjunction with Pax5 represses enhancer function in a position-dependent manner when Grg4 is recruited. Interestingly, Grg4 levels decrease following B-cell activation, suggesting temporal regulation of Grg4. Moreover, the joining-chain promoter, with an activity pattern and architecture resembling HS1,2 can also be repressed by the combinatorial action of Pax5/PU.1/Grg4. These data indicate that Pax5 depends on PU.1, acting in cis, for stable recruitment of Grg co-repressors to B-cell-specific genes.