Drosophila C-terminal binding protein functions as a context-dependent transcriptional co-factor and interferes with both Mad and Groucho transcriptional repression

Drosophila C-terminal binding protein (dCtBP) and Groucho have been identif ied as Hairy-interacting proteins required for embryonic segmentation and H airy-mediated transcriptional repression. While both dCtBP and Groucho are required for proper Hairy function, their properties are very different. As would be expected for a co-repressor, reduced Groucho activity enhances th e hairy mutant phenotype, In contrast, reduced dCtBP activity suppresses it . We show here that dCtBP can function as either a co-activator or co-repre ssor of transcription in a context-dependent manner. The regions of dCtBP r equired for activation and repression are separable. We find that mSin3A-hi stone deacetylase complexes are altered in the presence of dCtBP and that d CtBP interferes with both Groucho and Mad transcriptional repression. Simil ar to CtBP's role in attenuating E1A's oncogenicity, we propose that dCtBP can interfere with corepressor-histone deacetylase complexes, thereby atten uating transcriptional repression. Hairy defines a new class of proteins th at requires both CtBP and Groucho co-factors for proper function.