From a cDNA library of mouse skeletal muscle, we have isolated mouse Sim1 (mSim1) cDNA encoding a polypeptide of 765 amino acids with striking amino acid identity in basic helix-loop-helix (89% identity) and PAS (89% identity) domains to previously identified mSim2, although the carboxy-terminal third of the molecule did not show any similarity to mSim2 or Drosophila Sim (dSim). Yeast two-hybrid analysis and coimmunoprecipitation experiments demonstrated that both of the mSim gene products interacted with Arnt even more efficiently than AhR, a natural partner of Arnt, suggesting a functional cooperativity with Arnt. In sharp contrast with dSim having transcription-enhancing activity in the carboxy-terminal region, the two mSims possessed a repressive activity toward Arnt in the heterodimer complex. This is the first example of bHLH-PAS proteins with transrepressor activity, although some genetic data suggest that dSim plays a repressive role in gene expression (Z. Chang, D. Price, S. Bockheim, MJ Boedigheimer, R. Smith, and A. Laughon, Dev. Biol. 160: 315–332, 1993; DM Mellerick and M. Nirenberg, Dev. Biol. 171: 306–316, 1995). Whole-mount in situ hybridization showed restricted and characteristic expression patterns of the two mSim mRNAs in various tissues and organs during embryogenesis, such as those for the somite, the nephrogenic cord, and the mesencephalon (for mSim1) and those for the diencephalon, branchial arches, and limbs (for mSim1). From sequence similarity and chromosomal localization, it is concluded that mSim2 is an ortholog of hSIM2, which is proposed to be a candidate gene responsible for Down’s syndrome. The sites of mSim2 expression showed an overlap with the affected regions of the syndrome, further strengthening involvement of mSim2 in Down’s syndrome.