Regulation of cell type-specific gene transcription is central to cellular differentiation and development. During spermatogenesis, a number of testis-specific genes are expressed in a precise spatiotemporal order. How these genes remain silent in the somatic tissues is not well understood. Our previous studies using the round spermatid-specific mouse SP-10 gene, which codes for an acrosomal protein, revealed that its proximal promoter acts as an insulator and prevents expression in the somatic tissues. Here we report that the insulator tethers the SP-10 gene to the nuclear matrix in somatic tissues, sequestering the core promoter in the process, thus preventing transcription. In round spermatids where the SP-10 gene is expressed, this tethering is released. TAR DNA-binding protein of 43 kDa (TDP-43), previously shown to interact with the SP-10 insulator, was found to be in the 2 m NaCl-insoluble nuclear matrix fraction. TDP-43 prevented enhancer-promoter interactions when artificially recruited between the two by Gal4 strategy. Knockdown of TDP-43 using small interfering RNA released the enhancer-blocking effect of the SP-10 insulator in a stable cell culture model. Mutation of TDP-43 binding sites abolished this effect. Finally, a 50-bp subfragment of the SP-10 insulator, which includes TDP-43 binding sites, functioned as a minimal insulator in transgenic mice and silenced an otherwise ectopically expressed transgene in somatic tissues. The SP-10 insulator lacks CpG dinucleotides or CTCF binding sites. Thus, the present study characterized a novel vertebrate insulator in a physiological context and showed for the first time how a testis-specific gene is silenced in the somatic tissues by an insulator.