The NGFI-A binding corepressors NAB1 and NAB2 interact with a conserved domain (R1 domain) within the Egr1/NGFI-A and Egr2/Krox20 transactivators, and repress the transcription of Egr target promoters. Using a novel adaptation of the yeast two-hybrid screen, we have identified several point mutations in NAB corepressors that interfere with their ability to bind to the Egr1 R1 domain. Surprisingly, NAB proteins bearing some of these mutations increased Egr1 activity dramatically. The mechanism underlying the unexpected behavior of these mutants was elucidated by the discovery that NAB conserved domain 1 (NCD1) not only binds to Egr proteins but also mediates multimerization of NAB molecules. The activating mutants exert a dominant negative effect on NAB repression by multimerizing with native NAB proteins and preventing binding of endogenous NAB proteins with Egr transactivators. To examine NAB repression of a native Egr target gene, we show that NAB2 represses Egr2/Krox20-mediated activation of the bFGF/FGF-2 promoter, and that repression is reversed by coexpression of dominant negative NAB2. Because of their specific ability to alleviate NAB repression of Egr target genes, the dominant negative NAB mutants will be useful in elucidating the mechanism and function of NAB corepressors.