Host cell factor (HCF) was initially discovered as a cellular co-factor required for the activation of herpes simplex virus immediate early gene expression by the virion associated transactivator VP16. HCF also participates in a variety of cellular processes, although the mechanism of its action is not known. VP16 binds to HCF through a 4-amino acid motif (EHAY), which closely resembles the HCF binding domain of two cellular basic leucine-zipper proteins, Luman and Zhangfei. Luman is a powerful transcription factor that, in transient expression assays, activates promoters containing cAMP or unfolded protein response elements (UPRE). In contrast, Zhangfei neither binds consensus recognition elements for basic leucine-zipper proteins nor does it activate promoters containing them. Here we show that Zhangfei suppresses the ability of Luman to activate transcription. HCF appeared to be required for efficient suppression. A mutant of Zhangfei, which was unable to bind HCF, was impaired in its ability to suppress Luman. Zhangfei did not suppress ATF6, a transcription factor closely related to Luman but that does not bind HCF, unless the HCF binding motif of Luman was grafted onto it. Zhangfei inhibited the HCF-dependent activation of a UPRE-containing promoter by a Gal4-Luman fusion protein but was unable to inhibit the HCF-independent activation by Gal4-Luman of a promoter that contained Gal4 binding motifs. Binding of HCF by Zhangfei was required for the co-localization of Luman and Zhangfei to nuclear domains, suggesting that HCF might target the proteins to a common location.