Sp1-like zinc finger transcription factors are involved in the regulation of cell growth and differentiation. Recent evidence demonstrating that mammalian cells express novel, yet uncharacterized, Sp1-like proteins has stimulated a search for new members of this family. We and others have recently reported that the transforming growth factor (TGF)-beta-regulated gene TIEG encodes a new Sp1-like protein that inhibits cell growth in cultured cells. Here we report the identification, nuclear localization, DNA binding activity, transcriptional repression activity, and growth inhibitory effects of TIEG2, a novel TGF-beta-inducible gene related to TIEG. TIEG2 is ubiquitously expressed in human tissues, with an enrichment in pancreas and muscle. TIEG2 shares 91% homology with TIEG1 within the zinc finger region and 44% homology within the N terminus. Biochemical characterization reveals that TIEG2 is a nuclear protein, which, as predicted from the primary structure, specifically binds to an Sp1-like DNA sequence in vitro and can repress a promoter containing Sp1-Like binding sites in transfected Chinese hamster ovary epithelial cells. Furthermore, functional studies using [H-3]thymidine uptake and MTS (3-(4,3-dimethyltiazol-2 yl)-5-(3-carboxymethoxyphenyl)-2- (4-sulfophenyl) -2H-tetrazolium) assays demonstrate that the overexpression of TIEG2 in Chinese hamster ovary cells inhibits cell proliferation. Thus, TIEG2, together with TIEG1, defines a new subfamily of TGF-beta-inducible Sp1-Like proteins involved in the regulation of cell growth.