We previously described a control element in the granulocyte-macrophage colony-stimulating factor (GM-CSF) enhancer that is necessary and sufficient to mediate both transcriptional activation in response to T-cell stimuli and transcriptional repression by 1,25-dihydroxyvitamin D₃[1,25(OH)₂D₃] through the vitamin D₃ receptor (VDR). This DNA element is a composite site that is recognized by both Fos-Jun and NFAT1; it is directly bound by VDR in the absence of a retinoid X receptor as an apparent monomer, and it is bound in a unique tertiary conformation. We describe here the mechanism by which VDR elicits its transcriptional inhibitory effect. Firstly, VDR outcompetes NFAT1 for binding to the composite site. Overexpression of NFAT1 in vivo by transient transfection is able to relieve the 1,25(OH)₂D₃-dependent repression. Secondly, VDR stabilizes the binding of a Jun-Fos heterodimer to the adjacent AP-1 portion of the element. This appears to occur through a direct interaction between VDR and c-Jun, as demonstrated in vitro by direct glutathione S-transferase coprecipitation assays. In vivo, overexpression of c-Jun, but not c-Fos, leads to a rescue of the 1,25(OH)₂D₃-mediated repression. Transfected FLAG-VDR bound to the NFAT1–AP-1 DNA binding element can be selectively precipitated from nuclear extracts that are made from cells treated with activating agents in the presence of 1,25(OH)₂D₃. VDR is not detected in the complex in the absence of the ligand. Thus, VDR acts selectively on the two components required for activation of this promoter/enhancer: it competes with NFAT1 for binding to the composite site, positioning itself adjacent to Jun-Fos on the DNA. Co-occupancy apparently leads to an inhibitory effect on c-Jun’s transactivation function. These two events mediated by VDR effectively block the NFAT1–AP-1 activation complex, resulting in an attenuation of activated GM-CSF transcription.