Adipocyte determination and differentiation dependent factor 1 (ADD1)/sterol regulatory element binding protein isoform (SREBP1c) is a key transcription factor in fatty acid metabolism and insulin‐ dependent gene expression. Although its transcriptional and post‐translational regulation has been extensively studied, its regulation by interacting proteins is not well understood. To identify cellular proteins that associate with ADD1/SREBP1c, we employed the yeast two‐hybrid system with an adipocyte cDNA library. Using the N‐terminal domain of ADD1/SREBP1c as bait, we identified Twist2 (also known as Dermo‐1), a basic helix–loop–helix (bHLH) protein, as a novel ADD1/SREBP1c interacting protein. Over‐expression of Twist2 strongly repressed the transcriptional activity of ADD1/SREBP1c, primarily by reducing its binding to target sequences. Inhibition of histone deacetylase (HDAC) activity with HDAC inhibitors relieved this repression. Our data suggest that physical interaction between Twist2 and ADD1/SREBP1c attenuates transcriptional activation by ADD1/SREBP1c by inhibiting its binding to DNA, and that this inhibition is at least partly dependent on chromatin modification by HDACs.