The post-translational modifications of histones on chromatin or a lack thereof is critical in transcriptional regulation. Emerging studies indicate a role for histone binding proteins in transcriptional activation and repression. We have previously identified template activating factor-I (TAF-I, also called PHAPII, SET, I₂^pp2A) as a component of a cellular complex called INHAT (Inhibitor of Acetyltransferases) that masks histone acetylation in vitro and blocks HAT dependent transcription in living cells. TAF-I has also been shown to associate with transcription factors, including nuclear receptors to regulate their activity. To identify novel interactors of TAF-I, we employed a yeast two-hybrid screen and identified a previously uncharacterized human protein called Thanatos associated protein 7 (THAP7), a member of a large family of THAP domain containing putative DNA binding proteins. Here we demonstrate that THAP7 associates with TAF-I in vitro and map their association domains to a C- terminal predicted coiled-coil motif on THAP7 and the central region of TAF-I. Similarly, stably transfected THAP7 associates with endogenous TAF-I in intact cells. Like TAF-I, THAP7 associates with histone H3 and histone H4 and inhibits histone acetylation. The histone interacting domain of THAP7 is sufficient for this activity in vitro. Promoter targeted THAP7 can also recruit TAF-I and SMRT/NCoR corepressors to promoters, and knockdown of TAF-I by siRNA relieves THAP7 mediated repression, indicating that like nuclear hormone receptors, THAP7 may represent a novel class of transcription factor that utilizes TAF-I as a corepressor to maintain histones in a hypoacetylated, repressed state.