Since the small heat shock protein hsp27 enhances both growth and drug resistance in breast cancer cells, and is a bad prognostic factor in certain subsets of breast cancer patients, we have characterized the transcriptional regulation of hsp27, with the long-term goal of targeting its expression clinically. The majority of the promoter activity resides in the most proximal 200 bp. This region contains an imperfect estrogen response element (ERE) that is separated by a 13-bp spacer that contains a TATA box. Gel-shift analysis revealed the binding of a protein (termed HET for Hsp27-ERE-TATA-binding protein) to this region that was neither the estrogen receptor nor TATA-binding protein. We cloned a complete cDNA (2.9 kb) for HET from an MCF-7 cDNA library. To confirm the identity of the HET clone, we expressed a partial HET clone as a glutathione S-transferase fusion protein, and showed binding to the hsp27 promoter fragment in gel-retardation assays. The HET clone is almost identical to a recently published scaffold attachment factor (SAF-B) cloned from a HeLa cell cDNA library. Scaffold attachment factors are a subset of nuclear matrix proteins (NMP) that interact with matrix attachment regions. Analyzing how HET could act as a regulator of hsp27 transcription and as a SAF/NMP, we studied its subnuclear localization and its effect on hsp27 transcription in human breast cancer cells. We were able to show that HET is localized in the nuclear matrix in various breast cancer cell lines. Furthermore, in transient transfection assays using hsp27 promoter-luciferase reporter constructs, HET overexpression resulted in a dose-dependent decrease of hsp27 promoter activity in several cell lines.