The COUP-TFII (chicken ovalbumin upstream promoter-transcription factor II) nuclear receptor, which is composed of a DNA-binding domain and a ligand-binding domain, exerts pleiotropic effects on development and cell differentiation by regulating the transcription of its target genes, including Cyp7a1 (cytochrome P450, family 7, subfamily a, polypeptide 1), which plays important roles in catabolism of cholesterol in the liver. Although multiple variants of COUP-TFII exist, their roles in the regulation of Cyp7a1 expression have not been elucidated. In the present study, we investigated the roles of COUP-TFII-V2 (variant 2), which lacks a DNA-binding domain, in the regulation of the transcriptional control of the Cyp7a1 gene by COUP-TFII in hepatocellular carcinoma cells. We found that COUP-TFII-V2 was significantly expressed in Huh7 cells, in which Cyp7a1 was not expressed. Furthermore, knockdown of COUP-TFII-V2 enhanced endogenous Cyp7a1 expression in Huh7 cells. Although COUP-TFII activates the Cyp7a1 promoter through direct binding to DNA, this activation was affected by COUP-TFII-V2, which physically interacted with COUP-TFII and inhibited its DNA-binding ability. Chromatin immunoprecipitation assays showed that COUP-TFII-V2 inhibited the binding of endogenous COUP-TFII to the intact Cyp7a1 promoter. The results of the present study suggest that COUP-TFII-V2 negatively regulates the function of COUP-TFII by inhibiting its binding to DNA to decrease Cyp7a1 expression.