RhoB has been implicated in cell growth control, actin regulation, adhesion-dependent viability, and gene expression, but its effector functions are poorly defined. Prenylation is important for the physiological functions of Rho proteins, so to identify RhoB effector functions we identified proteins whose interaction was sensitive to prenylation. Here we report the investigation of one such protein, an ubiquitously expressed transcription factor termed DB1 that was originally cloned as a Tax-activated regulator of the IL3 promoter. The RhoB-binding domain in DB1 was located in a functionally undefined region upstream and separable from its zinc finger DNA binding domain. DB1 interacted strongly with prenylated RhoB but weakly with RhoA and not at all with H-Ras. Functional interaction was supported by the identification of prenylated species of RhoB in the nuclear membrane and in an intranuclear laminar region, where they were available for DB1 association in principle, and by the ability of RhoB to inhibit transcriptional activation by DB1, whereas RhoA or Ras had little or no effect, respectively. The results of this study suggest a novel mechanism by which certain Rho proteins may regulate transcription, through sequestration of a transcription factor.