X-linked adrenal hypoplasia congenita (AHC) with hypogonadotropic hypogonadism was recently shown to be caused by mutations in a gene referred to as DAX-1, which encodes a novel member of the orphan nuclear receptor family. DAX-1 is homologous to other nuclear receptors in its carboxy-terminal region, but it lacks the characteristic zinc finger DNA-binding domain. The tissue distribution of DAX-1 (adrenal cortex, gonads, hypothalamus, and pituitary) is the same as that of another orphan nuclear receptor, steroidogenic factor 1 (SF-1), that is required for development of the adrenal glands and gonads. We examined whether DAX-1 and SF-1 might interact in the regulation of SF-1-responsive target genes. Coexpression of DAX-1 and SF-1 inhibited SF-1-mediated transactivation. DAX-1 was shown to interact directly with SF-1 in in vitro protein binding studies; however, it did not interfere with SF-1 binding to DNA in gel mobility shift assays. Transactivation by GAL4–SF-1 constructs was inhibited by DAX-1, indicating that neither the SF-1 DNA-binding domain nor the SF-1 binding sites are required for inhibition by DAX-1. A series of DAX-1 deletion mutants localized the inhibitory domain to the carboxy-terminal region of the protein. Deletion of this domain also reduced basal transcriptional silencing by GAL4–DAX-1. This inhibitory domain has been deleted in all naturally occurring AHC deletion mutants described to date. In addition, two naturally occurring point mutations in DAX-1 exhibited impaired inhibition of SF-1. We conclude that DAX-1 can inhibit SF-1 transcriptional activity and suggest that the loss of this inhibitory property in DAX-1 may account in part for the phenotype of AHC.