The primary function of the HIV-1 regulatory protein Tat, activation of transcription from the viral LTR, is highly regulated by complex interactions between Tat and a number of host cell proteins. Tat nuclear import, a process mediated by importin beta, is a prerequisite for its activity. Here, we report and characterize the interaction of the human inhibitor of MyoD family domain-containing protein (I-mfa), HIC, with Tat at a biochemical and a functional level. This interaction was shown to occur in vivo and in vitro and to involve the nuclear localization signal and the transactivation responsive element-binding domains of Tat and the I-mfa domain of HIC. Coexpression of HIC and Tat resulted in the down-regulation of transactivation of the HIV-1 LTR, and colocalization studies revealed the cytoplasmic sequestration of Tat by HIC. Functionally this sequestration appears to be the underlying mechanism of LTR transcriptional repression by HIC and represents a unique mechanism for the control of Tat activity and regulation of HIV-1 replication.