The highly conserved and ubiquitously expressed 14‐3‐3 proteins regulate differentiation, cell cycle progression and apoptosis by binding intracellular phosphoproteins involved in signal transduction. By screening in vitro translated cDNA pools for the ability to bind 14‐3‐3, we identified a novel transcriptional co‐activator, TAZ (t ranscriptional co‐a ctivator with PD Z‐binding motif) as a 14‐3‐3‐binding molecule. TAZ shares homology with Yes‐associated protein (YAP), contains a WW domain and functions as a transcriptional co‐activator by binding to the PPXY motif present on transcription factors. 14‐3‐3 binding requires TAZ phosphorylation on a single serine residue, resulting in the inhibition of TAZ transcriptional co‐activation through 14‐3‐3‐mediated nuclear export. The C‐terminus of TAZ contains a highly conserved PDZ‐binding motif that localizes TAZ into discrete nuclear foci and is essential for TAZ‐stimulated gene transcription. TAZ uses this same motif to bind the PDZ domain‐containing protein NHERF‐2, a molecule that tethers plasma membrane ion channels and receptors to cytoskeletal actin. TAZ may link events at the plasma membrane and cytoskeleton to nuclear transcription in a manner that can be regulated by 14‐3‐3.