The corepressor CtBP (carboxyl-terminal binding protein) is involved in transcriptional pathways important for development, cell cycle regulation, and transformation. We demonstrate that CtBP binding to cellular and viral transcriptional repressors is regulated by the nicotinamide adenine dinucleotides NAD+ and NADH, with NADH being two to three orders of magnitude more effective. Levels of free nuclear nicotinamide adenine dinucleotides, determined using two-photon microscopy, correspond to the levels required for half-maximal CtBP binding and are considerably lower than those previously reported. Agents capable of increasing NADH levels stimulate CtBP binding to its partners in vivo and potentiate CtBP-mediated repression. We propose that this ability to detect changes in nuclear NAD+/NADH ratio allows CtBP to serve as a redox sensor for transcription.