Transcriptional regulation of the human immunodeficiency virus type 1 (HIV-1) genome is mediated by viral and cellular factors. TAR, an unusual RNA regulatory element with a stem-bulge-loop structure at the 5' ends of all nascent viral transcripts is critical for HIV-1 transcription. TAR is the target for Tat, a viral transcription factor encoded early in the HIV-1 life-cycle and essential for gene expression. Evidence demonstrating the interaction of a cellular ssDNA/RNA binding protein, YB-1, with TAR through a region which is important for Tat interaction is presented. Interestingly, results from protein-protein interaction studies revealed that YB-1 can also form a complex with Tat. Results from mapping experiments suggest that while the region spanning aa 125-203 within YB-1 is essential for its association with TAR, a truncated YB-1 spanning aa 1-125 can weakly bind to Tat. Functionally, overexpression of full-length YB-1 enhanced Tat-induced activation of the HIV-1 minimal promoter containing TAR sequences, whereas mutant YB- 1 with no ability to bind to Tat and TAR failed to affect Tat-mediated activation. Expression of mutant YB-1(1-125), which binds to Tat but not RNA, decreased Tat-mediated enhancement of virus transcription. These observations suggest that while full-length YB-1 may function as a facilitator and, by interaction with both Tat and TAR, increase the level of Tat:TAR association, mutant YB-1 with no TAR binding activity, by complexing with Tat, may prevent Tat interaction with TAR. The importance of these findings in light of the proposed mechanism of Tat function is discussed.