FCP1, a phosphatase specific for the carboxyl-terminal domain of the largest subunit of RNA polymerase II, is regulated by the HIV-1 Tat protein, CK2, TFIIB, and the large subunit of TFIIF (RAP74). We have characterized the interactions of Tat and RAP74 with the BRCT-containing central domain of FCP1 (FCP1(562)(-)(738)). We demonstrated that FCP1 is required for Tat-mediated transactivation in vitro and that amino acids 562-685 of FCP1 are necessary for Tat interaction in yeast two-hybrid studies. From sequence alignments, we identified a conserved acidic/hydrophobic region in FCP1 adjacent to its highly conserved BRCT domain. In vitro binding studies with purified proteins indicate that HIV-1 Tat interacts with both the acidic/hydrophobic region and the BRCT domain of FCP1, whereas RAP74(436)(-)(517) interacts solely with a portion of the acidic/hydrophobic region containing a conserved LXXLL-like motif. HIV-1 Tat inhibits the binding of RAP74(436)(-)(517) to FCP1. In a companion paper (K. Abbott et al. (2005) Enhanced Binding of RNAPII CTD Phosphatase FCP1 to RAP74 Following CK2 Phosphorylation, Biochemistry 44, 2732-2745, we identified a novel CK2 site adjacent to this conserved LXXLL-like motif. Phosphorylation of FCP1(562)(-)(619) by CK2 at this site increases binding to RAP74(436)(-)(517), but this phosphorylation is inhibited by Tat. Our results provide insights into the mechanisms by which Tat inhibits the FCP1 CTD phosphatase activity and by which FCP1 mediates transcriptional activation by Tat. In addition to increasing our understanding of the role of HIV-1 Tat in transcriptional regulation, this study defines a clear role for regions adjacent to the BRCT domain in promoting important protein-protein interactions.