Calcineurin B-homologous protein (CHP) 1 and 2 are Ca²⁺-binding proteins that modulate several cellular processes, including cytoplasmic pH by positively regulating plasma membrane-type Na^+/H{super+ exchangers (NHEs). Recently another CHP-related protein, termed tescalcin or CHP3, was also shown to interact with the ubiquitous NHE1 isoform, but seemingly suppressed its activity. However, the precise physical and functional nature of this association was not examined in detail. In this report, biochemical and cellular studies were undertaken to further delineate this relationship. Glutathione-S-transferase-NHE1 fusion protein pull-down assays revealed that full-length CHP3 binds directly to the proximal juxtamembrane C-terminal region (amino acids 505-571) of rat NHE1 in the same region that binds CHP1 and CHP2. The interaction was further validated by co-immunoprecipitation and co-immunolocalization experiments using full-length CHP3 and wild-type NHE1 in transfected Chinese hamster ovary AP-1 cells. Simultaneous mutation of four hydrophobic residues within this region (⁵³⁰FLDHLL⁵³⁵) to either Ala, Gln or Arg (FL-A, FL-Q or FL-R) abrogated this interaction both in vitro and in intact cells. The NHE1 mutants were sorted properly to the cell surface, but showed markedly reduced (FL-A) or minimal (FL-R and FL-Q) activity. Interestingly, and contrary to an earlier finding, ectopic co-expression of CHP3 upregulated the cell surface activity of wild-type NHE1. This stimulation was not observed with the CHP3 binding-defective mutants. Mechanistically, overexpression of CHP3 did not alter the H⁺ sensitivity of wild-type NHE1, but rather promoted its biosynthetic maturation and half-life at the cell surface; thereby increasing the steady-state abundance of functional NHE1 protein.