In previous work, we identified a set of phosducin (Phd) isoforms with unknown function including the phosducin (Phd)-like orphan protein 1 (PhLOP1), an amino terminal truncated isoform of the retinal Phd lacking the Gbetagamma binding domain. To investigate the potential biological function of PhLOP1, PhLOP1 was fused at its amino terminus with the DNA binding domain (BD) of the yeast transcriptional factor, GAL4, and used as bait in a yeast two-hybrid screen. Two potential functional protein partners were identified during the screen: SUG1, a subunit of the 26S proteasome and a putative transcriptional mediator, and CRX, a retina- and pineal-specific transcription factor. Upon localizing the interacting domain of PhLOP1 with one of the new partners, SUG1, we found that a domain of 40 amino acids at the carboxyl terminus of Phd and PhLOP1 had intrinsic transcriptional activation activity in yeast. The transactivation activity was further confirmed in mammalian cells. This region contains an acidic domain that has been shown to be involved in the function of several transcriptional activators. In addition, we showed that Phd is cytoplasmic while PhLOP1 is localized predominantly to the nucleus when fused to an enhanced green fluorescent protein (EGFP) and transiently expressed in transfected cells, suggesting that PhLOP1 may play a distinct functional role in transcriptional regulation independent of the known Phd interaction/regulation of Gbetagamma transduction.