The general transcriptional cofactor PC4 enhances transcription from various promoters and functions with a wide range of transcriptional activators. Earlier studies have suggested that this enhancement originates mostly from stabilization of the TATA-box/TFIID/TFIIA complex by simultaneous interaction of PC4 with transactivation domains of upstream-binding factors and the basal factor TFIIA. However, the C-terminal half of the protein also has been shown to exhibit substantial ssDNA binding properties, to which as yet no clear function has been assigned. We have investigated the interaction of this domain with various DNA structures and report that high-affinity binding, characterized by an equilibrium dissociation constant in the nanomolar range, requires either a heteroduplex containing a minimum of about eight mismatches, or alternatively a single-stranded DNA molecule consisting of 16 to 20 nucleotides. Furthermore, both juxtaposed single strands of a heteroduplex are protected by the C-terminal domain of PC4 in DNase I footprinting experiments, whereas the double-stranded regions do not appear to be contacted. We conclude from these observations that the role of PC4 ssDNA binding is likely to involve simultaneous interaction with opposing strands in internally melted duplexes, or the induction of a pronounced distortion in the local structure of ssDNA that results in a similar juxtaposed arrangement of single strands. In addition, we have observed that both the PC4 C-terminal domain and the intact PC4 destabilize dsDNA and we discuss the possible involvement of PC4 in promoter opening and other strand displacement events.