TFII-I family proteins are characterized structurally by the presence of multiple reiterated I-repeats, each containing a putative helix-loophelix domain. Functionally, they behave as multifunctional transcription factors that are activated by a variety of extracellular signals. In studying their subcellular localization, we noticed that these transcription factors frequently reside in subnuclear domains͞dots. Because nuclear dots are believed often to harbor components of histone deacetylase enzymes (HDACs), we investigated whether TFII-I family proteins colocalize and interact with HDACs. Here, we show that TFII-I and its related member hMusTRD1͞BEN physically and functionally interact with HDAC3. The TFII-I family proteins and HDAC3 also show nearly identical expression patterns in early mouse development. Consistent with our earlier observation that TFII-I family proteins also interact with PIASx, a member of the E3 ligase family involved in the small ubiquitin-like modifier (SUMO) pathway, we show further that PIASx physically and functionally interacts with HDAC3 and relieves the transcriptional repression exerted by HDAC3 upon TFII-I-mediated gene activation. These results suggest a complex interplay between two posttranslational pathways-histone modification and SUMOylation-brokered in part by TFII-I family proteins. E xtracellular signals often are transduced to the nucleus to bring about either up-regulation or down-regulation of specific genes. However, because the nuclear DNA is packaged with histones in nucleosomal arrays, to initiate transcriptional activation of any given gene, the promoter DNA must be accessible by the gene-specific activators as well as the basal machinery. Conversely, an actively transcribing genetic locus or a specific gene can be '''switched off'' by rendering the DNA inaccessible. Hence, the regulation of gene expression may begin at the level of chromatin alteration by concerted actions of histonemodifying enzymes. A histone acetyl transferase (HAT) acts by acetylating the tails of histones, lowering their positive charge and decreasing its stability of interactions with the DNA, upon which DNA becomes accessible. A histone deacetylase (HDAC) can reverse such an effect by deacetylating the histones, preserving their basic nature and, thereby, impeding DNA accessibility (1-3). Several other histone-tail modifications also have been described, such as methylation, ubiquitination, and phosphorylation (2, 3). It has been proposed that certain combinations of these modifications in one or more tails act sequentially or concomitantly to form a ''histone code'' recognized by specific regulatory proteins that lead to downstream events (4). It is generally believed that these enzymes are brought to the vicinity of the DNA and targeted to specific promoter regions through interactions with transcription factors, which can exert their effect only when the DNA is accessible. Therefore, to better understand how these enzymes regulate gene expression, considerable efforts have been spe...