Regulation of transcription by RNA polymerase II in eukaryotic cells requires both basal and accessory factors, which interact through specific protein-DNA or protein-protein interactions. The high mobility group 1 protein (HMG1) was previously demonstrated to be a nonhistone chromatin-associated protein, which selectively recognizes cruciform DNA rather than a specific primary sequence element. During our investigations of proteins that interact with TFIID, we found that purified mammalian HMG1, as well as recombinant human HMG1, can interact with TATA-binding protein (TBP) in the presence of a TATA box-containing oligonucleotide to form a specific HMG1.TBP.promoter complex. This complex prevents TFIIB binding to TBP and consequently blocks formation of the preinitiation complex. In contrast, TFIIA can compete with HMG1 for binding to TBP. In an in vitro transcription assay reconstituted with highly purified or recombinant general factors, HMG1 is able to inhibit transcription by RNA polymerase II over 30-fold. As expected, addition of TFIIA can partially reverse this repression in a concentration-dependent manner. These results demonstrate that HMG1, a chromatin-associated protein, has the potential to act as a TBP-dependent negative transcription factor and may provide an important link between chromatin structure and the modulation of class II gene transcription.