The neurofibromatosis type 2 gene-encoded protein, merlin, is related to the ERM (ezrin, radixin, and moesin) family of membrane-cytoskeleton-associated proteins. Recent studies suggest that the loss of neurofibromatosis type 2 function contributes to tumor development and metastasis. Although the cellular functions of merlin as a tumor suppressor are relatively well characterized, the cellular mechanism whereby merlin controls cell proliferation from membrane locations is still poorly understood. During our efforts to find potential merlin modulators through protein-protein interactions, we identified transactivation-responsive RNA-binding protein (TRBP) as a merlin-binding protein in a yeast two-hybrid screen. The interaction between TRBP and merlin was confirmed by glutathione S-transferase pull-down assays, co-immunoprecipitation, and co-localization experiments. The carboxyl-terminal regions of each protein were responsible for their interaction. Cells overexpressing TRBP showed enhanced cell growth in cell proliferation assays and also exhibited transformed phenotypes, such as anchorage-independent cell growth and tumor development in mouse xenografts. Merlin efficiently inhibited these oncogenic activities of TRBP in our experiments. These results provide the first clue to the functional interaction between TRBP and merlin and suggest a novel mechanism for the tumor suppressor function of merlin both in vitro and in vivo.