Proteins of the nuclear envelope have been implicated as participating in gene silencing. BAF, a DNA- and LEM domain-binding protein, has been suggested to link chromatin to the nuclear envelope. We have previously shown that LAP2beta, a LEM-domain inner nuclear membrane protein, represses transcription through binding to HDAC3 and induction of histone H4 deacetylation. We now show that LAP2zeta, the smallest LAP2 family member, is also involved in regulation of transcription. We show that similar to other LEM-domain proteins LAP2zeta interacts with BAF. LAP2zeta-YFP and BAF co-localize in the cytoplasm, and overexpression of LAP2zeta leads to reduction of nucleoplasmic BAF. Mutations in the LAP2zeta-YFP LEM domain decrease its interaction with BAF retaining the nucleo-cytoplasmic distribution of BAF. Co-expression of LAP2beta and LAP2zeta results in inhibition of LAP2beta-induced gene silencing while overexpression of LAP2zeta alone leads to a small increase in transcriptional activity of various transcription factors. Our results suggest that LAP2zeta is a transcriptional regulator acting predominantly to inhibit LAP2beta-mediated repression. LAP2zeta may function by decreasing availability of BAF. These findings could have implications in the study of nuclear lamina-associated diseases and BAF-dependent retroviral integration.