The DAX-1 gene encodes an unusual member of the nuclear hormone receptor superfamily. Mutations in the human DAX-1 gene cause X-linked adrenal hypoplasia congenita associated with hypogonadotropic hypogonadism. We have shown that DAX-1 binds to hairpin secondary structures and blocks steroidogenesis in adrenal cells via transcriptional repression of the steroidogenic acute regulatory protein (StAR) promoter. Here we have investigated the molecular mechanism of DAX-1-mediated repression. We show that the DAX-1 C terminus contains a potent transcriptional silencing activity, which can be transferred to a heterologous DNA-binding domain. Deletion analysis and modeling of DAX-1 structure identify two cooperating domains required for the silencing function, one located within helix H3 and the other within H12. The silencing function is cell- and promoter-specific. Strikingly, two point mutations (R267P and deltaV269) found in adrenal hypoplasia patients impair silencing. These findings suggest that transcriptional silencing by DAX-1 plays a critical role in the pathogenesis of adrenal hypoplasia congenita.