Histones are thought to play a key role in regulating gene expression at the level of DNA packaging. Recent evidence suggests that transcriptional activation requires competition of transcription factors with histones for binding to regulatory regions and that there may be several mechanisms by which this is achieved. We have characterized a human nucleosome assembly protein, NAP-2, previously identified by positional cloning at 11p15.5, a region implicated in several disease processes including Wilms tumor (WT) etiology. The deduced amino acid sequence of NAP-2 indicates that it encodes a protein with a potential nuclear localization motif and two clusters of highly acidic residues. Functional analysis of recombinant NAP-2 protein purified from Escherichia coli demonstrates that this protein can interact with both core and linker histones. We demonstrate that recombinant NAP-2 can transfer histones onto naked DNA templates. Deletion mutagenesis of NAP-2 demonstrates that both NH3- and COOH-terminal domains are required for histone transfer activity. Subcellular localization studies of NAP-2 indicate that it can shuttle between the cytoplasm and the nucleus, suggesting a role as a histone chaperone. Given the potential role of the human NAP-2 gene (HGMW-approved symbol NAP1L4) in WT etiology, we have elucidated the exon/intron structure of this gene and have analyzed the mutational status of NAP-2 in sporadic WTs. Our results, coupled with tumor suppression assays in G401 WT cells, do not support a role for NAP-2 in the etiology of WT. A putative role for NAP-2 in regulating cellular differentiation is discussed.