We identified a novel nuclear protein, NF-mu NR, that binds to multiple sites flanking the immunoglobulin heavy-chain enhancer. The expression of NF-mu NR shows a unique developmental pattern; the activity is present in all cells representing early stages of B-cell development, but is absent from more mature cells that express a high level of immunoglobulin heavy chains. NF-mu NR also is present in most cell lines outside of the B-cell lineage (e.g., T cells, macrophages, and fibroblasts). The binding sites for NF-mu NR correlate very well with cis-acting negative regulatory elements of the heavy-chain enhancer defined previously. Indeed, when the segments bound by NF-mu NR are deleted from the enhancer, it is now found to function as a positive transcription element in T cells and macrophages. Taken together, these results suggest that NF-mu NR may function as a negative regulator of enhancer function. The observation that the segments bound by NF-mu NR correspond to the segments bound to the nuclear matrix suggests an intriguing model not only of how enhancers might function but also of how negative regulation might occur.