Activation of HIV-1 gene expression by the transactivator Tat is dependent on an RNA regulatory element located downstream of the transcription initiation site known as TAR. To characterize cellular factors that bind to TAR RNA and are involved in the regulation of HIV-1 transcription, HeLa nuclear extract was fractionated and RNA gel-retardation analysis was performed. This analysis indicated that only two cellular factors, RNA polymerase II and the previously characterized TAR RNA loop binding protein TRP-185, were capable of binding specifically to TAR RNA. To elucidate the function of TRP-185, it was purified from HeLa nuclear extract, amino acid microsequence analysis was performed and a cDNA encoding TRP-185 was isolated. TRP-185 is a novel protein of 1621 amino acids which contains a leucine zipper and potentially a novel RNA binding motif. In gel-retardation assays, the binding of both recombinant TRP-185 and RNA polymerase II was dependent on the presence of an additional group of proteins designated cellular cofactors. Both the TAR RNA loop and bulge sequences were critical for RNA polymerase II binding, while TRP-185 binding was dependent only on TAR RNA loop sequences. Since binding of TRP-185 and RNA polymerase II to TAR RNA was found to be mutually exclusive, our results suggest that TRP-185 may function either alone or in conjunction with Tat to disengage RNA polymerase II which is stalled upon binding to nascently synthesized TAR RNA during transcriptional elongation.