Id helix-loop-helix (HLH) proteins act as global regulators of metazoan cell fate, cell growth, and differentiation. They heterodimerize with and inhibit the DNA-binding function of members of the basic helixloop-helix (bHLH) family of transcription factors. Using real time fluorescence microscopy techniques in single living cells, we show here that nuclear pools of chromatin-associated bHLH transcription factor are freely exchangeable and in constant flux. The existence of a dynamic equilibrium between DNA-bound and free bHLH protein is also directly demonstrable in vitro. By contrast, Id protein is not associated with any subcellular, macromolecular structures and displays a more highly mobile, diffuse nuclear-cytoplasmic distribution. When co-expressed with antagonist Id protein, the chromatinassociated sublocalization of bHLH protein is abolished, and there is an accompanying 100-fold increase in its nuclear mobility to a level expected for freely diffusible Id-bHLH heterodimer. These results suggest that nuclear Id protein acts by sequestering pools of transiently diffusing bHLH protein to prevent reassociation with chromatin domains. Such a mechanism would explain how Id proteins are able to overcome the large DNAbinding free energy of bHLH proteins that is necessary to accomplish their inhibitory effect.Id proteins function as global regulators of cell fate determination. They play a pivotal role in the coordinate regulation of gene expression during cell growth/cell cycle control, differentiation, and tumorigenesis (reviewed in Refs. 1 and 2). Recent studies have also highlighted their role in cellular senescence (3, 4) and in cell fate decisions in cells of specialized lineages such as lymphocytes (5) (reviewed in Ref. 6), vascular endothelial cells (7,8), and neuronal cells (7, 9). The four members of the Id protein family (Id1-Id4) function by directly associating with and modulating the activity of several families of transcriptional regulators (1, 10 -12). However, compelling biochemical and genetic data implicate members of the ubiquitously expressed Class A, basic helix-loop-helix (bHLH) 1 family of "E proteins" as the most important heterodimerization targets for Id proteins in the coordinate regulation of gene expression during cell fate determination (1, 2, 13, 14). In mammals, there are three E protein family genes, E2A (encoding three alternatively spliced variants, E12, E47, and E2-5), E2-2 (ITF2), and HEB (14). The E proteins bind to a consensus "E-box" recognition sequence, present in the transcriptional control regions of numerous cellular genes, either as a homodimer or, more commonly, as a heterodimeric partner with a member of the much larger family of tissue-specific, Class B bHLH proteins. Id proteins lack a basic, DNA-binding domain, and they heterodimerize avidly (via their HLH domain) with bHLH E proteins (13) to prevent the latter from binding to DNA (1,14). Since E proteins are obligate heterodimerization partners for tissue-specific bHLH proteins, this provides a common mechani...