The proline-rich homeodomain protein (PRH/Hex) is important in the control of cell proliferation and differentiation and in the regulation of multiple processes in embryonic development. We have shown previously that PRH contains two domains that can independently bring about transcriptional repression. The PRH homeodomain represses transcription by binding to TATA box sequences, whereas the proline-rich N-terminal domain of PRH can repress transcription when attached to a heterologous DNA-binding domain. The Groucho/transducin-like enhancer of split (TLE) family of proteins are transcriptional co-repressors that interact with a number of DNA-bound transcription factors and play multiple roles in development. Here we demonstrate that the proline-rich N-terminal domain of PRH binds to TLE1 in vitro and in yeast two-hybrid assays. We show that PRH and TLE proteins are co-expressed in hematopoietic cells and interact in co-immunoprecipitation assays. We demonstrate that TLE1 increases repression by PRH in transient transfection assays and that titration of endogenous TLE proteins by co-expression of Grg5, a natural trans-dominant negative protein, alleviates transcriptional repression by PRH. Finally, we show that a mutation in the PRH N-terminal domain that blocks the PRH-TLE1 interaction in vitro eliminates co-repression. We discuss these results in terms of the roles of PRH and TLE in cell differentiation and development.