Nuclear factor-erythroid number 2 (NF-E2) is a positive regulatory, DNA binding transcription factor for gene expression in erythroid and megakaryocytic cells. To further understand the mechanisms of NF-E2 function, we used expression cloning to identify coregulators interacting with the erythroid-specific subunit of NF-E2, p45. We have isolated a protein, NAPP2, which contains an aspartic-acid- and glutamic-acid-rich region and a nuclear localization signal. The gene encoding NAPP2, PEX14, is located on chromosome 1p36 and is ubiquitously expressed. The domains of interaction in vitro and in vivo between p45 and NAPP2 were mapped by a yeast two-hybrid system and cotransfection experiments. In mammalian cell culture, ectopically expressed NAPP2 inhibited p45-directed transcriptional activation. Furthermore, NAPP2 functions as a corepressor and interacts specifically with histone deacetylase l (HDAC1), but not HDAC2 or HDAC3. NAPP2 is thus potentially a negative coregulator of NF-E2. NAPP2 is identical to PEX14, an integral membrane protein essential for protein docking onto the peroxisomes. These studies have identified a novel, bifunctional protein capable of acting as a transcriptional corepressor and a polypeptide transport modulator. They also suggest that NF-E2 may function both positively and negatively in the transcription regulation of specific erythroid and megakaryocytic genes.