Msx2 and Dlx5 are homeodomain proteins that play an important role in osteoblast differentiation and whose expression is induced by bone morphogenetic proteins. Recently we have identified a novel protein, Dlxin-1, that associates with these homeodomain proteins and regulates Dlx5-dependent transcriptional function (Masuda, Y., Sasaki, A., Shibuya, H., Ueno, N., Ikeda, K., and Watanabe, K. (2001) J. Biol. Chem. 276, 5331-5338). In an attempt to elucidate the molecular function of Dlxin-1, two closely related RING finger proteins, Praja1 and Neurodap-1, were isolated by yeast two-hybrid screening using the C-terminal necdin homology domain of Dlxin-1 as bait. Glutathione S-transferase pull-down and immunoprecipitation/Western blotting assays following co-transfection of Dlxin-1 and Praja1 revealed that Praja1 binds to the C-terminal necdin homology domain of Dlxin-1 in vitro and in vivo, respectively. Overexpression of Praja1 caused a decrease in Dlxin-1 protein level, which was reversed when a proteasome inhibitor was added. Overexpression of Praja1 with a mutation in the RING finger inhibited the decrease in Dlxin-1 protein, pointing to the importance of ubiquitin-protein isopeptide ligase (E3) activity associated with RING finger. Wild-type Praja1, but not its RING finger mutant, promoted ubiquitination of Dlxin-1 in vivo. Finally, expression of Praja1 down-regulated Dlx5-dependent transcriptional activity in a GAL4-dependent assay. These results suggest that Praja1 regulates the transcription function of the homeodomain protein Dlx5 by controlling the stability of Dlxin-1 via an ubiquitin-dependent degradation pathway.