The phosphorylation of cAMP response element-binding protein (CREB) induced by the cAMP-dependent protein kinase A (PKA) elicits the recruitment of CREB-binding protein (CBP) for activating cAMP responsive gene expression. Several reports indicate that proteins binding to CREB and/or CBP play important roles in modulating the CREB-dependent transactivation. Here, we show that Daxx interacts with CREB and modulates CREB-mediated transcription. Daxx was identified as a CREB-interacting protein by a yeast two-hybrid screen. Depletion of endogenous Daxx by specific shRNA or overexpression of Daxx resulted in decreased or increased levels of the cAMP/PKA-induced reporter activity and target gene expression, respectively. In vitro and in vivo binding studies revealed that Daxx C-terminal domain binds to CREB basic leucine zipper domain. The binding of Daxx to CREB correlates with its repressive effect on a CRE-mediated reporter activity induced by forskolin or PKA. Furthermore, the results of electrophoresis mobility shift assays and chromatin immunoprecipitation experiments showed that Daxx attenuated the DNA binding potential of the CREB. Our study provides a previously undescribed role of Daxx in repressing cAMP-responsive gene expression and also a mechanism underlying the repressive effect of Daxx on CREB transcriptional potential.