Mutations in one of the 13 Fanconi anemia (FA) genes cause a progressive bone marrow failure disorder associated with developmental abnormalities and a predisposition to cancer. Although FA has been defined as a DNA repair disease based on the hypersensitivity of patient cells to DNA cross-linking agents, FA patients develop various developmental defects such as skeletal abnormalities, microphthalmia, and endocrine abnormalities that may be linked to transcriptional defects. Recently, we reported that the FA core complex interacts with the transcriptional repressor Hairy Enhancer of Split 1 (HES1) suggesting that the core complex plays a role in transcription. Here we show that the FA core complex contributes to transcriptional regulation of HES1-responsive genes, including HES1 and the cyclin-dependent kinase inhibitor p21cip1/waf1. Chromatin immunoprecipitation studies show that the FA core complex interacts with the HES1 promoter but not the p21cip1/waf1 promoter. Furthermore, we show that the FA core complex interferes with HES1 binding to the co-repressor transducin-like-Enhancer of Split, suggesting that the core complex affects transcription both directly and indirectly. Taken together these data suggest a novel function of the FA core complex in transcriptional regulation. ? 2009 by The American Society for Biochemistry and Molecular Biology, Inc.