The t(X;18)(p11.2;q11.2) chromosomal translocation commonly found in synovial sarcomas fuses the SYT gene on chromosome 18 to either of two similar genes, SSX1 or SSX2, on the X chromosome. The SYT protein appears to act as a transcriptional co-activator and the SSX proteins as co-repressors. Here we have investigated the functional domains of the proteins. The SYT protein has a novel conserved 54 amino acid domain at the N-terminus of the protein (the SNH domain) which is found in proteins from a wide variety of species, and a C-terminal domain, rich in glutamine, proline, glycine and tyrosine (the QPGY domain), which contains the transcriptional activator sequences. Deletion of the SNH domain results in a more active transcriptional activator, suggesting that this domain acts as an inhibitor of the activation domain. The C-terminal SSX domain present in SYT-SSX translocation protein contributes a transcriptional repressor domain to the protein. Thus, the fusion protein has transcriptional activating and repressing domains. We demonstrate that the human homologue of the SNF2/Brahama protein BRM co-localizes with SYT and SYT-SSX in nuclear speckles, and also interacts with SYT and SYT-SSX proteins in vitro. This interaction may provide an explanation of how the SYT protein activates gene transcription.