Death domain-associated protein (Daxx) regulates both transcription and apoptosis. The role of Daxx in transcription is not well understood. Here, we show that Daxx interacts with Skip/NcoA62, a transcription cofactor that modulates the activity of oncoproteins including Ski and NotchIC. Daxx strongly binds with Skip both in vitro and in mammalian cells. This interaction is mediated by the PAH2 domain of Daxx and the highly conserved SNW domain of Skip. Daxx partially co-localizes with Skip in vivo and changes the cellular distribution of Skip. In addition, Skip represses transcription when tethered to a promoter, and Daxx antagonizes this activity. Furthermore, Skip is phosphorylated at serine 224 in its SNW domain. These results suggest a novel function of Daxx in transcription regulation through alteration of the cellular localization of Skip.