The zebrafish nlz gene has a rostral expression limit at the presumptive rhombomere (r) 3/r4 boundary during gastrula stages, and its expression progressively expands rostrally to encompass both r3 and r2 by segmentation stages, suggesting a role for nlz in hindbrain development. We find that Nlz is a nuclear protein that associates with the corepressor Groucho, suggesting that Nlz acts to repress transcription. Consistent with a role as a repressor, misexpression of nlz causes a loss of gene expression in the rostral hindbrain, likely due to ectopic nlz acting prematurely in this domain, and this repression is accompanied by a partial expansion in the expression domains of r4-specific genes. To interfere with endogenous nlz function, we generated a form of nlz that lacks the Groucho binding site and demonstrate that this construct has a dominant negative effect. We find that interfering with endogenous Nlz function promotes the expansion of r5 and, to a lesser extent, r3 gene expression into r4, leading to a reduction in the size of r4. We conclude that Nlz is a transcriptional repressor that controls segmental gene expression in the hindbrain. Lastly, we identify additional nlz-related genes, suggesting that Nlz belongs to a family of zinc-finger proteins.