Mutations in BRCA1 are responsible for nearly all of the hereditary ovarian and breast cancers, and about half of those in breast cancer-only kindreds. The ability of BRCA1 to transactivate the p21 promoter can be inactivated by mutation of the conserved BRCA1 C-terminal (BRCT) repeats. To explore the mechanisms of this BRCA1 function, the BRCT repeats were used as bait in a yeast two-hybrid screen. A known protein, CtIP, a co-repressor with CtBP, was found. CtIP interacts specifically with the BRCT repeats of BRCA1, both in vitro and in vivo, and tumor-derived mutations in this region abolished these interactions. The association of BRCA1 with CtIP was also abrogated in cells treated with DNA-damaging agents including UV, gamma-irradiation, and adriamycin, a response correlated with BRCA1 phosphorylation. The transactivation of the p21 promoter by BRCA1 was diminished by expression of exogenous CtIP and CtBP. These results suggest that the binding of the BRCT repeats of BRCA1 to CtIP/CtBP is critical in mediating transcriptional regulation of p21 in response to DNA damage.