The small heterodimer partner SHP (NR0B2) is an unusual nuclear receptor that lacks the typical DNA binding domain common to most nuclear receptors. SHP has been reported to act as a corepressor for several nuclear receptors, but its exact mechanism of action is still elusive. Here we show that SHP can interact with the liver X receptors LXRalpha (NR1H3) and LXRbeta (NR1H2), as demonstrated by glutathione-S-transferase pull-down assays, mammalian two-hybrid, and coimmunoprecipitation experiments. In transfection assays, SHP inhibits the expression of an artificial reporter driven by an LXR-response element and represses the transcriptional activation by LXR of the human ATP-binding cassette transporter 1 (ABCA1) promoter. Treatment of Caco-2 cells with bile acids, which activate farnesoid X receptor and subsequently induce SHP, leads to the repression of the human ABCG1 gene, an established LXR target gene. These results demonstrate that SHP is able to interact with LXR and to modulate its transcriptional activity.