The human T-cell leukemia virus type 1 (HTLV-1) viral protein Tax is a transactivator of transcription driven by the cognate viral long terminal repeat (LTR). Tax exerts its effect through three nonidentical copies of the Tax-responsive element (TxRE), a member of the asymmetric cyclic AMP response element (CRE) family of enhancer sequences. Transactivation is mediated via interaction of Tax with members of the CREB/ATF family bound to TxRE. We have identified a cellular repressor of transcription, activating transcription factor x (ATFx), as a novel Tax-binding protein. In addition to binding directly to Tax we show by electrophoretic mobility shift assay that ATFx binds to the TxRE enhancer element via the bZIP domain. The functional impact of this bridging interaction results in repression of both basal and Tax-induced transcription from the HTLV-1 LTR. ATFx is unique among ATF family of proteins in that it is cell cycle regulated and exerts a tight repressive control over apoptotic signaling. We propose that recruitment of ATFx to the HTLV-1 LTR serves to link viral transcription with critical events in cellular homeostasis.