Tax, an oncogenic viral protein encoded by human T cell leukemia virus type 1 (HTLV-1), induces cellular transformation of T lymphocytes by modulating a variety of cellular gene expressions [1]. Identifying cellular partners that interact with Tax constitutes the first step toward elucidating the molecular basis of Tax-induced transformation. Here, we report a novel Tax-interacting protein, hTid-1. hTid-1, a human homolog of the Drosophila tumor suppressor protein Tid56, was initially characterized based on its interaction with the HPV-16 E7 oncoprotein [2]. hTid-1 and Tid56 are members of the DnaJ family [2,3], which contains a highly conserved signature J domain that regulates the activities of heat shock protein 70 (Hsp70) by serving as cochaperone [4-6]. In this context, the molecular chaperone complex is involved in cellular signaling pathways linked to apoptosis, protein folding, and membrane translocation and in modulation of the activities of tumor suppressor proteins, including retinoblastoma, p53, and WT1[7-12]. We find that expression of hTid-1 inhibits the transformation phenotype of two human lung adenocarcinoma cell lines. We show that Tax interacts with hTid-1 via a central cysteine-rich domain of hTid-1 while a signature J domain of hTid-1 mediates its binding to Hsp70 in HEK cells. Importantly, Tax associates with the molecular chaperone complex containing both hTid-1 and Hsp70 and alters the cellular localization of hTid-1 and Hsp70. In the absence of Tax, expression of the hTid-1/Hsp70 molecular complex is targeted to perinuclear mitochondrial clusters. In the presence of Tax, hTid-1 and its associated Hsp70 are sequestered within a cytoplasmic "hot spot" structure, a subcellular distribution that is characteristic of Tax in HEK cells.