Members of the highly related TEF-1 (transcriptional enhancer factor-1) family (also known as TEAD, for TEF-1, TEC1, ABAA domain) bind to MCAT (muscle C, A and T sites) and A/T-rich sites in promoters active in cardiac, skeletal and smooth muscle, placenta, and neural crest. TEF-1 activity is regulated by interactions with transcriptional co-factors [p160, TONDU (Vgl-1, Vestigial-like protein-1), Vgl-2 and YAP65 (Yes-associated protein 65 kDa)]. The strong transcriptional co-activator YAP65 interacts with all TEF-1 family members, and, since YAP65 is related to TAZ (transcriptional co-activator with PDZ-binding motif), we wanted to determine if TAZ also interacts with members of the TEF-1 family. In the present study, we show by GST (glutathione S-transferase) pull-down assays, by co-immunoprecipitation and by modified mammalian two-hybrid assays that TEF-1 interacts with TAZ in vitro and in vivo. Electrophoretic mobility-shift assays with purified TEF-1 and GST-TAZ fusion protein showed that TAZ interacts with TEF-1 bound to MCAT DNA. TAZ can interact with endogenous TEF-1 proteins, since exogenous TAZ activated MCAT-dependent reporter promoters. Like YAP65, TAZ interacted with all four TEF-1 family members. GST pull-down assays with increasing amounts of [35S]TEF-1 and [35S]RTEF-1 (related TEF-1) showed that TAZ interacts more efficiently with TEF-1 than with RTEF-1. This differential interaction also extended to the interaction of TEF-1 and RTEF-1 with TAZ in vivo, as assayed by a modified mammalian two-hybrid experiment. These data show that differential association of TEF-1 proteins with transcriptional co-activators may regulate the activity of TEF-1 family members.