Serum amyloid A-activating factor-1 (SAF-1), a Cys(2)His(2)-type zinc finger transcription factor, regulates inflammation-induced expression of serum amyloid A protein that is linked to the pathogenesis of reactive amyloidosis, rheumatoid arthritis, and atherosclerosis. Here we report the identification of a novel splice variant, SAF-2, of the SAF family bearing strong sequence similarity to SAF-1. The N-terminal 426 amino acids of both SAF-1 and SAF-2 are identical containing two polyalanine tracts, one proline-rich domain, and six zinc fingers. However, the C terminus of SAF-2 containing two additional zinc fingers is different from SAF-1, which indicates the capability of different biochemical function. We show that SAF-2 interacts more avidly with the SAF-binding element, but its transactivation potential is much lower than SAF-1. Furthermore, co-expression of SAF-2 markedly suppresses SAF-1-regulated promoter function. Finally, we show that the level of SAF-2 protein is reduced during many inflammatory conditions, whereas the SAF-1 protein level remains unchanged. Together, these data suggest that the relative abundance of SAF-2 plays a critical role in the fine tuned regulation of inflammation-responsive genes that are controlled by SAF-1.