The high mobility group (HMG) box domain has defined a family of proteins, mostly transcription factors, that specifically interacts with DNA on the minor groove and sharply bends it. The founding member of the family, HMG1, does not specifically recognize regular B-DNA but is recruited to DNA by interaction with other transcription factors and TATA box-binding protein (TBP). However, conflicting effects of HMG1 on transcription have been reported. We show that the interaction between HMG1 and TBP is species-specific. This interaction in turn affects the interaction of TBP with transcription factor (TF) IIB and is competed by TFIIA. A primary binding site was mapped to the H2' alpha-helix in the highly conserved core domain of human TBP. On HMG1, the primary binding site was only in the HMG box A, and HMG box A was also sufficient to interact with native TFIID. Both HMG boxes efficiently repressed transcription in vitro as fusions to the Gal4-DNA binding domain. Additionally, HMG box B showed a weak level of activation at very low amounts. These results suggest a general involvement of HMG1 at the early stages of polymerase II transcription that may result in subtle activation or repression of individual genes.