The expression of endogenous retroviruses of the HERV-K(HML-2) family is strongly upregulated in germ cell tumors and several other cancers. Although the accessory Rec protein of HERV-K(HML-2) has been shown to induce carcinoma in situ in transgenic mice, to increase the activity of c-myc and to interact with the androgen receptor (AR), whether or not Rec expression is indeed implicated causally in the initiation or progression of any human malignancies remains unclear. We used the yeast two-hybrid system involving the Rec protein of a recently integrated HERV-K(HML-2) element in an effort to identify potential Rec-related oncogenic mechanisms. This revealed the human small glutamine-rich tetratricopeptide repeat (TPR)-containing protein (hSGT) to be a cellular binding partner. The interaction of Rec with this known negative regulator of the AR was confirmed by coimmunoprecipitation, pull-down assays and colocalization studies. The interaction involves the TPR motif of hSGT and takes place in the cytoplasm and in the nucleoli. Using an AR-responsive promoter and gene we could demonstrate that Rec interference with hSGT resulted in an up to five-fold increase in the activity of AR. Furthermore, in AR positive cells, Rec was shown to act as transactivator by enhancing AR-mediated activation of the HERV-K(HML-2) LTR promoter. This is in line with previous observations of elevated HERV-K(HML-2) expression in steroid-regulated tissues. On the basis of our findings we propose a “vicious cycle” model of Rec-driven hyperactivation of the AR leading to increased cell proliferation, inhibition of apoptosis and eventually to tumor induction or promotion.