ETS1 is a member of the evolutionarily conserved family of ets genes, which are transcription factors that bind to unique DNA sequences, either alone or by association with other proteins. In this study, we have used the yeast two-hybrid system to identify an ETS1 interacting protein. The ETS1 N-terminal amino acid region was used as bait and an interaction was identified with the Daxx protein, referred to as EAP1 (ETS1 Associated Protein 1)/Daxx. This interactin has been shown to exist in yeast and in vitro. EAP1/Daxx and ETS1 are co-localized in the nucleus of mammalian cells. The region in EAP1/Daxx which specifically binds to ETS1 is located within its carboxy terminal 173 amino acid region. The ETS1 interaction region is located within its N-terminal 139 amino acids and is referred as the Daxx Interaction Domain (DID). The DID appears to be conserved in several other ets family members, as well as in other proteins known to interact with Daxx. The EAP1/Daxx interacts with both isoforms of ETS1, p51-ETS1 and p42-ETS1. Interaction of EAP1/Daxx with ETS1 causes the repression of transcriptional activation of the MMP1 and BCL2 genes. The interaction domains of both ETS1 and EAP1/Daxx are required for this repression and deletion of either domain abolishes this activity.