PBX1 is a homeodomain protein that functions in complexes with other homeodomain-containing proteins to regulate gene expression during developmental and/or differentiation processes. A yeast two-hybrid screen of a fetal liver-hematopoietic cDNA library using PBX1a as bait led to the discovery of a novel non-homeodomaincontaining protein that interacts with PBX1 as well as PBX2 and PBX3. RNA analysis revealed it to be expressed in CD34؉ hematopoietic cell populations enriched in primitive progenitors, as is PBX1; search of the expressed sequence tag data base indicated that it is also expressed in other early embryonic as well as adult tissues. The full-length cDNA encodes a 731-amino acid protein that has no significant homology to known proteins. This protein that we have termed hematopoietic PBX-interacting protein (HPIP) is mainly localized in the cytosol and in small amounts in the nucleus. The region of PBX that interacts with HPIP includes both the homeodomain and immediate N-terminal flanking sequences. Strikingly, electrophoretic mobility shift assays revealed that HPIP inhibits the ability of PBX-HOX heterodimers to bind to target sequences. Moreover, HPIP strongly inhibits the transactivation activity of E2A-PBX. Together these findings suggest that HPIP is a new regulator of PBX function.The PBC protein family (mammalian PBX, C. elegans CEH-20 and Drosophila extradenticle) make critical contributions to cell fate and segmental patterning during embryogenic development (1-3). PBX1, a member of the PBX family along with PBX2 and PBX3 (4), was initially identified as the chromosome 1 participant of the t(1;19) translocation, which occurs in 25% of pediatric pre-B cell acute lymphocytic leukemia and that creates a chimeric gene designated E2A-PBX1 (5, 6). The mechanism by which E2A-PBX1 causes leukemia is still unclear. However, the structure of the protein, in which the majority of PBX1, including the homeodomain, is fused to the transcriptional activation domain of E2A (6, 7), suggests that the oncogenic properties of E2A-PBX1 result from inappropriate regulation of target genes whose expression during hematopoiesis is normally regulated by wild type PBX proteins (8 -11).In vitro and in vivo data strongly suggest that PBX functions in combination with heterologous homeodomain proteins, including class I HOX proteins. As HOX cofactors, PBC proteins improve HOX specificity due to the increased size of the cooperative binding site and the strength of DNA binding, as well as by modulating recognition of cooperative binding sites by different groups of HOX proteins (12-14). In addition, cooperative DNA binding with PBC proteins may act to change the regulatory signal of HOX proteins, from repressors to activators (15). HOX-PBC interaction optimally requires the PBC homeodomain and a short carboxyl-terminal region, called the HOX cooperativity motif (16,17).Although PBC proteins contribute to HOX DNA binding specificity, PBC-HOX complexes exhibit little transcriptional activity and thus alone do not account ...