The Tat protein of human immunodeficiency virus type 1 (HIV-1) plays a key role as inducer of viral gene expression. We report that Tat function can be potently inhibited in human microglial cells by the recently described nuclear receptor cofactor chicken ovalbumin upstream promoter transcription factor-interacting protein 2 (CTIP2). Overexpression of CTIP2 leads to repression of HIV-1 replication, as a result of inhibition of Tat-mediated transactivation. In contrast, the related CTIP1 was unable to affect Tat function and viral replication. Using confocal microscopy to visualize Tat subcellular distribution in the presence of the CTIPs, we found that overexpression of CTIP2, and not of CTIP1, leads to disruption of Tat nuclear localization and recruitment of Tat within CTIP2-induced nuclear ball-like structures. In addition, our studies demonstrate that CTIP2 colocalizes and associates with the heterochromatin-associated protein HP1␣. The CTIP2 protein harbors two Tat Regulation of human immunodeficiency virus type 1 (HIV-1) gene transcription is governed by a complex interplay between chromatin-associated proviral DNA, host cell proteins, and the virus-encoded transactivator protein, Tat. In the immediateearly phase of HIV infection, cellular transcription factors activate transcription from the viral long terminal repeat (LTR) (for a review, see references 24 and 32). This leads to the accumulation of the viral protein Tat that leads to a potent increase in transcription and is required for viral replication and a high viral load (for a review, see reference 37). The ability of Tat to function as a transcriptional activator is mediated by multiple interactions with cellular proteins and requires the concerted action of Tat and upstream nuclear factors that bind to the Sp1 and B region of the LTR (for reviews, see references 16 and 17). Tat forms a ternary complex with the coactivators P/CAF and p300 which helps Tat activate transcription of integrated viral DNA and derepress the HIV-1 chromatin structure in response to histone acetylation (3). Mechanisms that inhibit HIV-1 LTR expression are largely unexplored. Recent studies have shown that Tat activation can be inhibited by the overexpression of the host factors YY1 and LSF, which recruit histone deacetylase 1 to the LTR (20).We have previously reported that Tat also interacts and cooperates with an orphan member of the nuclear receptor superfamily, the chicken ovalbumin upstream promoter transcription factor (COUP-TF) that together with Sp1 activates HIV-1 LTR-driven transcription (34,35). Members of the COUP-TF family were recently shown to bind to novel and related zinc finger proteins and COUP TF-interacting protein 1 (CTIP1) and CTIP2. CTIP1 was found to induce transcriptional silencing by relocating COUP-TF to distinct nuclear structures, possibly associated with heterochromatic regions (1). These studies revealed a novel mechanism for transcriptional repression, by recruitment of a transcription factor to distinct nuclear loci, instead of acting t...