Protein kinase C-theta (PKCtheta) is a Ca(2+)-independent PKC isoform that is selectively expressed in T lymphocytes (and muscle), and is thought to play an important role in T cell receptor-induced activation. To gain a better understanding of the function and regulation of PKCtheta, we have employed the yeast two-hybrid system to identify PKCtheta-interacting proteins. We report the isolation and characterization of a cDNA encoding a novel 335-amino acid (37. 5-kDa) PKCtheta-interacting protein termed PICOT (for PKC-interacting cousin of thioredoxin). PICOT is expressed in various tissues, including in T cells, where it colocalizes with PKCtheta. PICOT displays an N-terminal thioredoxin homology domain, which is required for the interaction with PKC. Comparison of the unique C-terminal region of PICOT with expressed sequence tag data bases revealed two tandem repeats of a novel domain that is highly conserved from plants to mammals. Transient overexpression of full-length PICOT (but not its N- or C-terminal fragments) in T cells inhibited the activation of c-Jun N-terminal kinase (but not extracellular signal-regulated kinase), and the transcription factors AP-1 or NF-kappaB. These findings suggest that PICOT and its evolutionary conserved homologues may interact with PKC-related kinases in multiple organisms and, second, that it plays a role in regulating the function of the thioredoxin system.