The TFIID components TAF7 and TAF1 regulate eukaryotic transcription initiation. TAF7 regulates transcription initiation of TAF1-dependent genes by binding to the acetyltransferase (AT) domain of TAF1 and inhibiting the enzymatic activity that is essential for transcription. TAF7 is released from the TAF1/TFIID complex upon completion of preinitiation complex assembly, allowing transcription to initiate. However, not all transcription is TAF1-dependent and the role of TAF7 in regulating TAF1-indepedent transcription has not been defined. The IFN-gamma--induced transcriptional co-activator CIITA activates MHC class I and class II genes, which are vital for immune responses, in a TAF1 independent manner. Activation by CIITA depends on its intrinsic AT activity. We now show that TAF7 binds to CIITA and inhibits its AT activity, thereby repressing activated transcription. Consistent with this TAF7 function, siRNA-mediated depletion of TAF7 results in increased CIITA-dependent transcription. A more global role for TAF7 as a regulator of transcription was revealed by expression profiling analysis: expression of 30-40% of genes affected by TAF7 depletion was independent of either TAF1 or CIITA. Surprisingly, while TAF1-dependent transcripts are largely down-regulated by TAF7-depletion, TAF1-independent transcripts are predominantly up-regulated. We conclude that TAF7, until now considered only a TFIID component and regulator of TAF1-dependent transcription, also regulates TAF1-independent transcription.