Hepatoma-derived growth factor (HDGF) is a nuclear protein with both mitogenic and angiogenic activity that is highly expressed in the developing heart and vasculature. To date, the mechanism underlying the function of HDGF is unknown. Oligonucleotide microarray analysis was used to gain insights into HDGF function. Adenoviral expression of HDGF significantly (> or =2-fold) downregulated a large group (66) of genes, and increased expression of a relatively small number of genes (9). Two groups of target genes that are involved in cardiovascular development and transcriptional regulation, including the skeletal/cardiac muscle specific SET and MYND domain containing 1 (SMYD1) gene, were validated by real time PCR. This suggested that HDGF could function as a transcriptional repressor. In a one-hybrid system, GBD-HDGF significantly repressed reporter gene activity in a dose-dependent manner. This demonstrated that HDGF has transcriptional repressive activity. Moreover, in G-7 myoblast cells, over-expression of a GFP-HDGF fusion specifically downregulated SMYD1 mRNA expression and the activity of the human SMYD1 promoter. HDGF repressed SMYD1 gene transcription through interaction with a transcriptional corepressor C-terminal binding protein (CtBP). Over-expression of CtBP potentiated the trans-repressive activity of HDGF; on the other hand, knocking down CtBP attenuated the trans-repressive effect of HDGF. HDGF binds CtBP through a non-canonical binding motif (PKDLF) within the PWWP domain, as mutation of DL to AS abolished HDGF and CtBP interaction, and diminished the trans-repressive effect of HDGF without affecting DNA binding. Finally, fluorescent microscopy showed that HDGF induced the nuclear accumulation of CtBP, suggesting that HDGF forms a transcriptional complex with CtBP. Taken together, our data demonstrate that HDGF functions as a transcriptional repressor of the SMYD1 gene through interaction with the transcriptional corepressor CtBP. Because of moderate conservation of the CtBP binding motif in HDGF family members, trans-repressive activity mediated by CtBP may be a common function among HDGF proteins.