The basic helix-loop-helix (bHLH) factor Hand1 plays an essential role in cardiac morphogenesis, and yet its precise function remains unknown. Protein-protein interactions involving Hand1 provide a means of determining how Hand1-induced gene expression in the developing heart might be regulated. Hand1 is known to form either heterodimers with near-ubiquitous E-factors and other lineage-restricted class B bHLH proteins or homodimers with itself in vitro. To date, there have been no reported Hand1 protein interactions involving non-bHLH proteins. Heterodimer-versus-homodimer choice is mediated by the phosphorylation status of Hand1; however, little is known about the in vivo function of these dimers or, importantly, how they are regulated. In an effort to understand how Hand1 activity in the heart might be regulated postdimerization, we have investigated tertiary Hand1-protein interactions with non-bHLH factors. We describe a novel interaction of Hand1 with the LIM domain protein FHL2, a known transcriptional coactivator and corepressor expressed in the developing cardiovascular system. FHL2 interacts with Hand1 via the bHLH domain and is able to repress Hand1/E12 heterodimer-induced transcription but has no effect on Hand1/Hand1 homodimer activity. This effect of FHL2 is not mediated either at the level of dimerization or via an effect of Hand1/E12 DNA binding. In summary, our data describe a novel differential regulation of Hand1 heterodimers versus homodimers by association of the cofactor FHL2 and provide insight into the potential for a tertiary level of control of Hand1 activity in the developing heart.