p120(ctn) is an Armadillo repeat domain protein with structural similarity to the cell adhesion cofactors beta-catenin and plakoglobin. All three proteins interact directly with the cytoplasmic domain of the transmembrane cell adhesion molecule E-cadherin; beta-catenin and plakoglobin bind a carboxy-terminal region in a mutually exclusive manner, while p120 binds the juxtamembrane region. Unlike beta-catenin and plakoglobin, p120 does not interact with alpha-catenin, the tumor suppressor adenomatous polyposis coli (APC), or the transcription factor Lef-1, suggesting that it has unique binding partners and plays a distinct role in the cadherin-catenin complex. Using p120 as bait, we conducted a yeast two-hybrid screen and identified a novel transcription factor which we named Kaiso. Kaiso's deduced amino acid sequence revealed an amino-terminal BTB/POZ protein-protein interaction domain and three carboxy-terminal zinc fingers of the C2H2 DNA-binding type. Kaiso thus belongs to a rapidly growing family of POZ-ZF transcription factors that include the Drosophila developmental regulators Tramtrak and Bric à brac, and the human oncoproteins BCL-6 and PLZF, which are causally linked to non-Hodgkins' lymphoma and acute promyelocytic leukemia, respectively. Monoclonal antibodies to Kaiso were generated and used to immunolocalize the protein and confirm the specificity of the p120-Kaiso interaction in mammalian cells. Kaiso specifically coprecipitated with a variety of p120-specific monoclonal antibodies but not with antibodies to alpha- or beta-catenin, E-cadherin, or APC. Like other POZ-ZF proteins, Kaiso localized to the nucleus and was associated with specific nuclear dots. Yeast two-hybrid interaction assays mapped the binding domains to Arm repeats 1 to 7 of p120 and the carboxy-terminal 200 amino acids of Kaiso. In addition, Kaiso homodimerized via its POZ domain but it did not heterodimerize with BCL-6, which heterodimerizes with PLZF. The involvement of POZ-ZF proteins in development and cancer makes Kaiso an interesting candidate for a downstream effector of cadherin and/or p120 signaling.