Levels of the mRNA NAC-1 are increased in the rat forebrain weeks after cocaine exposure. This long-term neuroadaptation occurs during the expression of behavioral sensitization, a model of psychostimulant-induced paranoia. NAC-1, the protein encoded by this cocaine-regulated mRNA, contains a Pox virus and zinc finger/bric-a-brac tramtrack broad complex (POZ/BTB) motif, which mediates interactions among several transcriptional regulators. The present studies demonstrate that NAC-1 acts as a transcription factor. NAC-1 was localized to the nucleus of neurons in the brain. Transfection of NAC-1 in cell culture repressed transcription of a reporter gene. NAC-1 was also able to affect the actions of other POZ/BTB proteins in mammalian two-hybrid studies; these interactions required the presence of the POZ/BTB domain. However, NAC-1 appears to be a unique POZ/BTB transcriptional regulator because it does not contain any zinc finger regions found in these other DNA-binding proteins. Adenoviral-mediated overexpression of NAC-1 protein in the rat nucleus accumbens prevented the development but not the expression of behavioral sensitization produced by repeated administration of cocaine. Thus, NAC-1 may modify the long-term behaviors of psychostimulant abuse by regulating gene transcription in the mammalian brain.