Members of the hepatic nuclear factor 3 (HNF3) family, including HNF3alpha, HNF3beta, and HNF3gamma, play important roles in embryonic development, the establishment of tissue-specific gene expression, and the regulation of gene expression in differentiated tissues. We found, using the glutathione S-transferase pull-down method, that the transducin-like Enhancer of split (TLE) proteins, which are the human homologs of Drosophila Groucho, directly associate with HNF3beta. Conserved region II of HNF3beta (amino acids 361-388) is responsible for the interaction with TLE1. A mammalian two-hybrid assay was used to confirm that this interaction occurs in vivo. Overexpression of TLE1 in HepG2 and HeLa cells decreases transactivation mediated through the C-terminal domain of HNF3beta, and Grg5, a naturally occurring dominant negative form of Groucho/TLE, also increases the transcriptional activity of this region of HNF3. These results lead us to suggest that TLE proteins could influence the expression of mammalian genes regulated by HNF3.