The co-repressor proteins SMRT and NCoR concentrate in specific subnuclear compartments and function with DNA-binding factors to inhibit transcription. To provide detailed mechanistic understanding of these activities, this study tested the hypothesis that functional interactions with transcription factors, such as the pituitary-gland-specific Pit-1 homeodomain protein, direct the subnuclear organization and activity of co-repressor complexes. Both SMRT and NCoR repressed Pit-1-dependent transcription, and NCoR was co-immunoprecipitated with Pit-1. Immunofluorescence experiments confirmed that endogenous NCoR is concentrated in small focal bodies and that incremental increases in fluorescent-protein-tagged NCoR expression lead to progressive increases in the size of these structures. In pituitary cells, the endogenous NCoR localized with endogenous Pit-1 and the co-expression of a fluorescent-protein-labeled Pit-1 redistributed both NCoR and SMRT into diffuse nucleoplasmic compartments that also contained histone deacetylase and chromatin. Automated image-analysis methods were applied to cell populations to characterize the reorganization of co-repressor proteins by Pit-1 and mutation analysis showed that Pit-1 DNA-binding activity was necessary for the reorganization of co-repressor proteins. These data support the hypothesis that spherical foci serve as co-repressor storage compartments, whereas Pit-1/co-repressor complexes interact with target genes in more widely dispersed subnuclear domains. The redistribution of co-repressor complexes by Pit-1 might represent an important mechanism by which transcription factors direct changes in cell-specific gene expression.