Fluxes in amounts of intracellular calcium ions are important determinants of gene expression^,,. So far, Ca²⁺-regulated kinases and phosphatases have been implicated in changing the phosphorylation status of key transcription factors and thereby modulating their function,. In addition, direct effectors of Ca²⁺-induced gene expression have been suggested to exist in the nucleus, although no such effectors have been identified yet. Expression of the human prodynorphin gene, which is involved inmemory acquisition and pain,, is regulated through its downstream regulatory element (DRE) sequence, which acts as a location-dependent gene silencer. Here we isolate a new transcriptional repressor, DRE-antagonist modulator (DREAM), which specifically binds to the DRE. DREAM contains four Ca²⁺-binding domains of the EF-hand type. Upon stimulation by Ca²⁺, DREAM's ability to bind to the DRE and its repressor function are prevented. Mutation of the EF-hands abolishes the response of DREAM to Ca²⁺. In addition to the prodynorphin promoter, DREAM represses transcription from the early response gene c-fos. Thus, DREAM represents the first known Ca²⁺-binding protein to function as a DNA-binding transcriptional regulator.