Adipocyte enhancer-binding protein 1 (AEBP1) is a down-regulator of adipogenesis through its transcriptional repression activity, as well as through its interaction with mitogen-activated protein kinase (MAPK), which protects MAPK from its specific phosphatases. This study increases our understanding of the mechanisms of DNA binding by AEBP1, the first step in its function as a transcriptional repressor. We show that DNA binding by AEBP1 requires both the N- and C-terminal domains of AEBP1, and MAPK interaction with AEBP1 (through its N terminus) results in enhanced DNA binding. A threonine at position 623 within the C-terminal domain of AEBP1 plays an important role in DNA binding by AEBP1, because the mutation results in decreased DNA binding by AEBP1, which leads to a decrease in the transcriptional repression ability of AEBP1. We also show that in vitro phosphorylation of AEBP1 by MAPK is greatly reduced upon mutation of T623. These results suggest that MAPK regulates the transcriptional activity of AEBP1 by a novel dual mechanism, in which MAPK interaction enhances and subsequent phosphorylation decreases the DNA-binding ability of AEBP1.