During lytic infection in epithelial cells the expression of herpes simplex virus type 1 (HSV-1) immediate-early (IE) genes is initiated by a multiprotein complex comprising the virion-associated protein VP16 and two cellular proteins, host cellular factor (HCF) and Oct-1. Oct-1 directly recognizes TAATGARAT elements in promoters of IE genes. The role of HCF is not clear. HSV-1 also infects sensory neurons innervating the site of productive infection and establishes a latent infection in these cells. It is likely that some VP16 is retained by the HSV-1 nucleocapsid as it reaches the neuronal nucleus. Its activity must therefore be suppressed for successful establishment of viral latency. Recently, we discovered an HCF-binding cellular protein called Zhangfei. Zhangfei, in an HCF-dependent manner, inhibits Luman/LZIP/CREB3, another cellular HCF-binding transcription factor. Here we show that Zhangfei is selectively expressed in human neurons. When delivered to cultured cells that do not normally express the protein, Zhangfei inhibited the ability of VP16 to activate HSV-1 IE expression. The inhibition was specific for HCF-dependent transcriptional activation by VP16, since a Gal4-VP16 chimeric protein was inhibited only on a TAATGARAT-containing promoter and not a on a Gal4-containing promoter. Zhangfei associated with VP16 and inhibited formation of the VP16-HCF-Oct-1 complex on TAATGARAT motifs. Zhangfei also suppressed HSV-1-induced expression of several cellular genes including topoisomerase IIalpha, suggesting that in addition to suppressing IE expression Zhangfei may have an inhibitory effect on HSV-1 DNA replication and late gene expression.