The nuclear protein NIPP1 (nuclear inhibitor of protein Ser/Thr phosphatase-1) interacts with the splicing factors SAP155 and CDC5L and is involved in a late step of spliceosome assembly. In addition, NIPP1 is an interactor of protein phosphatase-1 and a COOH-terminal NIPP1 fragment displays an RNase E like endoribonuclease activity. A yeast two-hybrid screening resulted in the identification of the Polycomb group protein EED (embryonic ectoderm development), an established transcriptional repressor, as a novel NIPP1 interactor. NIPP1 only interacted with full-length EED, whereas two EED interaction domains were mapped to the central and COOH-terminal thirds of NIPP1. The NIPP1-EED interaction was potentiated by the binding of (d)Grich nucleic acids to the central domain of NIPP1. Nucleic acids also decreased the potency of NIPP1 as an inhibitor of PP1, but they did not prevent the formation of a ternary NIPP1⅐EED⅐PP1 complex. EED had no effect on the function of NIPP1 as a splicing factor or as an endoribonuclease. However, similar to EED, NIPP1 acted as a transcriptional repressor of targeted genes and this NIPP1 effect was mediated by the EED interaction domain. Also, the histone deacetylase 2 was present in a complex with NIPP1. Our data are in accordance with a role for NIPP1 as a DNA-targeting protein for EED and associated chromatin-modifying enzymes.NIPP1 1 (39 kDa, 351 residues) is a ubiquitously expressed nuclear protein that was originally discovered as a potent and specific inhibitor of protein Ser/Thr phosphatase-1 (PP1), hence its name nuclear inhibitor of PP1 (1). NIPP1 contains binding sites for PP1 in its central and COOH-terminal domains (2,3) and is complexed to 30 -50% of the nuclear pool of PP1 (4). The NIPP1-PP1 holoenzyme in nuclear extracts is inactive but can be activated by the phosphorylation of NIPP1 with protein kinase A (Ser-199), protein kinase CK2 (Ser-204), or protein tyrosine kinases of the Src family (Tyr-335) (3, 5-7). More recently, we demonstrated that NIPP1 is required for a late step in the assembly of spliceosomes (8), which are the complexes of small nuclear RNAs and proteins that catalyze pre-mRNA splicing. The splicing function of NIPP1 depends on the NH 2 -terminal third (residues 1-142) of NIPP1, which largely consists of a forkhead-associated (FHA) domain, and on residues 225-329 in the COOH-terminal domain of NIPP1. The FHA domain of NIPP1 interacts with phosphorylated forms of the splicing factors SAP155 (9) and CDC5L (10), which are components of the U2 small nuclear ribonucleoprotein particle and U4/U5/U6 tri-small nuclear ribonucleoprotein particles, respectively. It is not known how residues 225-329 of NIPP1 contribute to spliceosome assembly. The extreme COOH terminus of NIPP1 (residues 329 -351) does not appear to be involved in spliceosome assembly but has binding sites for PP1 and for A/U-rich single-stranded nucleic acids (3, 11). In addition, a synthetic peptide corresponding to residues 329 -351 as well as NIPP1-(225-351), which may exist as a splice va...