Krüppel-like factor 5 (KLF5) is a zinc finger-containing transcription factor that regulates proliferation of various cell types; including fibroblasts, smooth muscle cells, and intestinal epithelial cells. To identify proteins that interact with KLF5, we performed a yeast two-hybrid screen of a day-17 mouse embryo cDNA library with KLF5 as bait. The screen revealed 21 preys clustered in four groups: proteins mediating gene expression, metabolism, trafficking, and signaling. Among them was protein inhibitor of activated STAT 1 (PIAS1), a small ubiquitin-like modifier (SUMO) ligase that regulates transcription factors through SUMOylation or physical interaction. Association between PIAS1 and KLF5 was verified by co-immunoprecipitation. Structural determination showed that the acidic domain of PIAS1 bound to both the amino- and carboxyl-terminal regions of KLF5 and that this interaction was inhibited by the amino terminus of PIAS1. Indirect immunofluorescence demonstrated that PIAS1 and KLF5 co-localized to the nucleus. Furthermore, the PIAS1/KLF5 complex was co-localized with TATA-binding protein (TBP) and was enriched in RNA polymerase II (POL II) foci. Transient transfection of COS-7 cells by PIAS1 and KLF5 significantly increased the steady-state protein levels of each other. Luciferase reporter and chromatin immunoprecipitation assays showed that PIAS1 significantly activated the promoters of KLF5 and PIAS1, and synergistically increased the transcriptional activity of KLF5 in activating the cyclin D1 and Cdc2 promoters. Importantly, PIAS1 increased the ability of KLF5 to enhance cell proliferation in transfected cells. These results indicate that PIAS1 is a functional partner of KLF5 and enhances the ability of KLF5 to promote proliferation.