An approximately 120-amino acid domain present generally at the NH2 termini, termed the POZ domain, is highly conserved in various proteins with zinc finger DNA binding motifs. We have isolated a novel protein sharing homology with the POZ domain of a number of zinc finger proteins, including the human BCL-6 protein. By using a binding site selection technique (CAST), a high affinity binding site of the protein was determined to be (A/C)ACATCTG(G/T)(A/C), containing the E box core sequence motif. The protein was shown to repress transcription from a promoter linked to its target sequences and was hence named RP58 (Repressor Protein with a predicted molecular mass of 58 kDa). Immunogold electron microscopic study revealed that almost all RP58 is localized in condensed chromatin regions. These observations demonstrate for the first time that a protein mediating a sequence-specific transcriptional repression associates with highly condensed chromatin. We suggest that RP58 may be involved in a molecular link between sequence-specific transcriptional repression and the organization of chromosomes in the nucleus.