Regulation of chromatin in eukaryotic transcription requires histone-modifying enzymes, nucleosome remodeling complexes, and histone chaperones. Specific regulation of histone incorporation/eviction by histone chaperones on the promoter (e.g., region specific) is still poorly understood. In the present study, we show that direct and functional interaction of histone chaperone and DNA-binding transcription factor leads to promoter region-specific histone incorporation and inhibition of histone acetylation. We report here that the DNAbinding transcription factor KrĂŒppel-like factor 5 (KLF5) interacts with the novel histone chaperone acidic nuclear phosphoprotein 32B (ANP32B), leading to transcriptional repression of a KLF5-downstream gene. We further show that recruitment of ANP32B onto the promoter region requires KLF5 and results in promoter region-specific histone incorporation and inhibition of histone acetylation by ANP32B. Extracellular stimulus (e.g., phorbol ester) regulates this mechanism in the cell. Collectively, we have identified a novel histone chaperone, ANP32B, and through analysis of the actions of this factor show a new mechanism of promoter region-specific transcriptional regulation at the chromatin level as mediated by the functional interaction between histone chaperone and DNA-binding transcription factor.Eukaryotic transcription at the chromatin/nucleosome level is regulated by posttranslational chemical modification of histones, chromatin remodeling, and incorporation/eviction of histones including histone variants (11,13,17,20,22,40,52,53). Regulation of chromatin transcription is mediated by three classes of factors including histone chaperones (a.k.a. ATPindependent nucleosome assembly factors), chemical modification enzymes (e.g., acetylases/deacetylases etc.), and ATPdependent nucleosome remodeling factors (4,22,25,41,46). Recent studies have further suggested that the histone chaperones are important key regulators of chromatin/nucleosome structural regulation in many if not all higher-order DNAassociated processes ranging from transcription to DNA replication/repair (1,2,8,12,16,23,35,38,50). Of these three classes of chromatin/nucleosome-modulating factors, the mechanisms and actions of the histone chaperones, which are the central regulators of nucleosome assembly/disassembly (histone incorporation/eviction) (4, 5, 17, 52), are the least well understood. Understanding the precise role of histone chaperones in regulation of transcription at the nucleosomal level will therefore be of critical importance to further advancing our understanding of the underlying mechanisms of chromatin transcription.One important question in chromatin transcription which remains poorly understood is the mechanism underlying region-specific (e.g., promoter-specific) nucleosomal regulation. As gene-specific transcription is likely dictated by the DNAbinding transcription factor whose actions are critically dictated through its cognate binding sequence on the promoter, investigations focused on understandi...