The c-myc promoter binding protein (MBP-1) is a DNA binding protein which negatively regulates the expression of the human c-myc gene. MBP-1 binds to a sequence which overlaps the binding site for the general transcription factor TBP, within the c-myc P2 promoter region. Since TBP binds in the minor groove, MBP-1 might inhibit c-myc transcription by preventing the formation of a functional preinitiation complex. In support of this hypothesis, we have demonstrated that MPB-1 is a minor groove binding protein. In order to characterize MBP-1 binding, we substituted A-T base pairs in the MBP-1 binding site with I-C base pairs, which changes the major groove surface without altering the minor groove surface. This substitution did not inhibit the sequence-specific binding of MBP-1 and TBP. On the other hand, G-C to I-C substitution within the MBP-1 binding site alters the minor groove and prevents MBP-1 binding. Competitive electrophoretic mobility shift assays were used to show that berenil, distamycin, and mithramycin, all of which bind in the minor groove, compete with MBP-1 for binding to the MPB-1 binding site. These minor groove binding ligands also effectively inhibit the simultaneous DNA binding activity of both MBP-1 and TBP. We conclude that both MBP-1 and TBP can bind simultaneously in the minor groove of the TATA motif on the c-myc P2 promoter. This suggests that MBP-1 may negatively regulate c-myc gene expression by preventing efficient transcription initiation.