Mutations in small heterodimer partner (SHP) and hepatocyte nuclear factor 4alpha (HNF4alpha) are associated with mild obesity and diabetes mellitus, respectively. Both receptors work together to determine the normal pancreatic beta-cell function. We examined their subcellular localization and interaction in living cells by tagging them with yellow and cyan variants of green fluorescent protein (GFP) variants. Expressed SHP resided only in the cytoplasm in COS-7 cells which lacks HNF4alpha, but predominantly in the nucleus in insulinoma cells (MIN6). HNF4alpha was localized exclusively in the nuclei of both cells, coexpressed with HNF4alpha in COS-7 cells, redistributed in the nucleus, depending on the amount of HNF4alpha. We found fluorescence resonance energy transfer between GFP-tagged SHP and HNF4alpha, indicating a specific close association between them in the nucleus. The results strongly suggest that SHP exists primarily in the cytoplasm and is translocated into the nucleus on interacting with its nuclear receptor partner HNF4alpha. (C) 2002 EIsevier Science (USA).