A novel genetic system to isolate a dominant negative effector on DNA-binding activity of Oct-2. Recent studies have revealed that interactions between transcription factors play an important role in regulation of gene expression in eukaryotic cells. To isolate cDNA clones that dominantly inhibit the DNA-binding activity of Oct-2, chosen as a representative factor, we have developed a novel screening system. This employs an Escherichia coli tester strain carrying a modified lac operon as a reporter gene, with the lac operator sequence replaced by an octamer sequence. Oct-2 expressed in this tester strain represses the expression of the reporter gene and changes the phenotype of the cell from Lac+to Lac-. Introduction of a cDNA expression library prepared from a human T-cell line into the Oct-2-harboring tester strain allowed selection of three Lac+clones out of 1 x 10(5) transformants. One of them, hT86, encoding a putative zinc finger protein was found to derepress beta-galactosidase activity in the Oct-2-harboring tester strain at the transcriptional level. In gel mobility shift assays, hT86 attenuated the intensity of the retarded band composed of the octamer probe and Oct-2, suggesting a dominant negative effect on the DNA-binding activity of Oct-2. The strategy described here provides a new approach for studying protein-protein interactions that govern the complex regulation of gene expression.