Transcription elongation regulator 1 (TCERG1) is an inhibitor of transcriptional elongation, and interacts with transcription and splicing factors, suggesting that it assists in coupling and coordinating these two processes. Recently we showed that TCERG1 possesses an additional activity, that being to repress the transactivation and anti-proliferative activities of the transcription factor CCAAT/Enhancer Binding Protein α (C/EBPα). In the present study, we provide evidence that TCERG1 functions as an inhibitor of C/EBPα rather than a transcriptional co-repressor. This conclusion was based on reporter gene experiments demonstrating that TCERG1 was able to reverse not only C/EBPα-mediated transactivation of promoter activity, but also C/EBPα-mediated transrepression of a promoter which is inhibited by C/EBPα. These observations, along with our previous findings that TCERG1 inhibits cellular proliferation conferred by C/EBPα, support the relabeling of TCERG1 as an inhibitor C/EBPα. Using mutants of TCERG1, we showed that the inhibitory activity lies in the amino terminal region. Because C/EBPα and TCERG1 have been shown to occupy different subnuclear compartments, we examined whether nuclear relocalization of either protein was involved in the inhibition of C/EBPα by TCERG1. Using confocal microscopy, we showed that TCERG1 localizes to nuclear speckles in the absence of C/EBPα. However, when co-expressed with C/EBPα, TCERG1 localizes to pericentromeric sites where C/EBPα resides. Nuclear redistribution of TCERG1 is required for its inhibitory activity, since mutants that did not display nuclear relocalization also lacked C/EBPα-inhibitory activity. We propose that TCERG1 inhibits C/EBPα activity by keeping it retained in inactive, pericentromeric heterochromatin. J. Cell. Biochem. 109: 140–151, 2010. © 2009 Wiley-Liss, Inc.