Hepatitis B virus X-associated protein (HBXAP) is a plant homeodomain (PHD) finger-containing protein implicated in transcription regulation. However, the underlying molecular mechanism remains to be defined. Here, we show that HBXAP represses NF-kappaB-mediated gene activation in a dose-dependent manner. Our results showed that HBXAP and NF-kappaB colocalize to the nuclear matrix with specific physical interaction between them. HBXAP may depend on its nuclear matrix localization for its repression of NF-kappaB-mediated gene repression. A specific nuclear matrix targeting sequence of HBXAP was identified. The sequence is included in a region encompassing amino acids 688-722 that could form a coiled-coil structure. The 18-amino acid stretch lies at the core of that structure. The present results showed that either the coiled-coil conformation or the PHD finger domain is crucial for the transcription repression activity of HBXAP on NF-kappaB-mediated gene activation. Taken together, our results suggest that HBXAP may function as a negative regulator for TNF-alpha-induced, NF-kappaB-mediated gene activation.