Proteins in the E2A family of basic helix-loop-helix transcription factors are important in a wide spectrum of physiologic processes as diverse as neurogenesis, myogenesis, lymphopoeisis, and sex determination. In the pancreatic beta cell, E2A proteins, in combination with tissue-specific transcription factors, regulate expression of the insulin gene and other genes critical for beta-cell function. By yeast two-hybrid screening of a cDNA library prepared from rat insulinoma (INS-1) cells, we identified a novel protein, Bridge-1, that interacts with E2A proteins and functions as a coactivator of gene transcription mediated by E12 and E47. Bridge-1 contains a PDZ-like domain, a domain known to be involved in protein-protein interactions. Bridge-1 is highly expressed in pancreatic islets and islet cell lines and the expression pattern is primarily nuclear. The interaction of Bridge-1 with E2A proteins is further demonstrated by coimmunoprecipitation of in vitro-translated Bridge-1 with E12 or E47 and by mammalian two-hybrid studies. The PDZ-like domain of Bridge-1 is required for interaction with the carboxy terminus of E12. In both yeast and mammalian two-hybrid interaction studies, Bridge-1 mutants lacking an intact PDZ-like domain interact poorly with E12. An E12 mutant (E12DeltaC) lacking the carboxy-terminal nine amino acids shows impaired interaction with Bridge-1. Bridge-1 has direct transactivational activity, since a Gal4 DNA-binding domain-Bridge-1 fusion protein transactivates a Gal4CAT reporter. Bridge-1 also functions as a coactivator by enhancing E12- or E47-mediated activation of a rat insulin I gene minienhancer promoter-reporter construct in transient-transfection experiments. Substitution of the mutant E12DeltaC for E12 reduces the coactivation of the rat insulin I minienhancer by Bridge-1. Inactivation of endogenous Bridge-1 in insulinoma (INS-1) cells by expression of a Bridge-1 antisense RNA diminishes rat insulin I promoter activity. Bridge-1, by utilizing its PDZ-like domain to interact with E12, may provide a new mechanism for the coactivation and regulation of transcription of the insulin gene.