Brain factor 1 (BF-1) is a winged-helix transcriptional repressor that plays important roles in both progenitor cell differentiation and regional patterning in the mammalian telencephalon. The aim of this study was to elucidate the molecular mechanisms underlying BF-1 functions. It is shown here that BF-1 interacts in vivo with global transcriptional corepressors of the Groucho family and also associates with the histone deacetylase 1 protein. The ability of BF-1 to mediate transcriptional repression is promoted by Groucho and inhibited by the histone deacetylase inhibitor trichostatin A, suggesting that BF-1 recruits Groucho and histone deacetylase activities to repress transcription. Our studies also provide the first demonstration that Groucho mediates a specific interaction between BF-1 and the basic helix-loop-helix protein Hes1 and that BF-1 potentiates transcriptional repression by Hes1 in a Groucho-dependent manner. These findings suggest that Groucho participates in the transcriptional functions of BF-1 by acting as both a corepressor and an adapter between BF-1 and Hes1. Taken together with the demonstration that these proteins are coexpressed in telencephalic neural progenitor cells, these results also suggest that complexes of BF-1, Groucho, and Hes factors may be involved in the regulation of progenitor cell differentiation in the telencephalon.