The yeast two-hybrid system was used to isolate a clone from a 17-day-old mouse embryo cDNA library that codes for a novel 812-aa long protein fragment, glucocorticoid receptor-interacting protein 1 (GRIP1), that can interact with the hormone binding domain (HBD) of the glucocorticoid receptor. In the yeast two-hybrid system and in vitro, GRIP1 interacted with the HBDs of the glucocorticoid, estrogen, and androgen receptors in a hormone-regulated manner. When fused to the DNA binding domain of a heterologous protein, the GRIP1 fragment activated a reporter gene containing a suitable enhancer site in yeast cells and in mammalian cells, indicating that GRIP1 contains a transcriptional activation domain. Overexpression of the GRIP1 fragment in mammalian cells interfered with hormone-regulated expression of mouse mammary tumor virus-chloramphenicol acetyltransferase gene and constitutive expression of cytomegalovirus-beta-galactosidase reporter gene, but not constitutive expression from a tRNA gene promoter. This selective squelching activity suggests that GRIM can interact with an essential component of the RNA polymerase II transcription machinery. Finally, while a steroid receptor HBD fused with a GAL4 DNA binding domain did not, by itself, activate transcription of a reporter gene in yeast, coexpression of this fusion protein with GRIP1 strongly activated the reporter gene. Thus, in yeast, GRIP1 can serve as a coactivator, potentiating the transactivation functions in steroid receptor HBDs, possibly by acting as a bridge between HBDs of the receptors and the basal transcription machinery.