We have cloned a cardiovascular-restricted basic helix-loop-helix factor that interacts with arylhydrocarbon receptor nuclear translocator (ARNT) in a yeast two-hybrid screen. Cardiovascular helix-loop-helix factor 1 (CHF1) is distantly related to the hairy family of transcriptional repressors. We analyzed its expression pattern during mouse embryo development. At day 8.5, the expression of CHF1 is first detected in the primitive ventricle of the primordial heart tube and persists throughout gestation. In rat hearts, this expression is down-regulated after birth, concurrent with terminal differentiation of cardiomyocytes. In the developing vasculature, CHF1 first appears in the dorsal aorta at day 9.0, which precedes the reported expression of smooth muscle cell markers, and persists into adulthood. In an in vitro system of smooth muscle cell differentiation, CHF1 mRNA was barely detectable in undifferentiated cells but was induced highly in differentiated smooth muscle cells. To determine whether CHF1 might affect the function of ARNT, we performed transfection studies. Co-transfection of CHF1 inhibited ARNT/EPAS1-dependent transcription by 85%, and this inhibition is dose-dependent. In electrophoretic mobility studies, CHF1 inhibited the binding of the ARNT/EPAS1 heterodimer to its target site. Our data suggest that CHF1 functions as a transcriptional repressor and may play an important role in cardiovascular development.