The four known ID proteins (ID1-4, Inhibitor of Differentiation) share a homologous helix loop helix (HLH) domain and act as dominant negative regulators of basic-HLH transcription factors. ID proteins also interact with many non-bHLH proteins in complex networks. The expression of ID proteins is increasingly observed in many cancers. Whereas ID-1, ID-2 and ID-3, are generally considered as tumor promoters, ID4 on the contrary has emerged as a tumor suppressor. In this study we demonstrate that ID4 heterodimerizes with ID-1, -2 and -3 and promote bHLH DNA binding, essentially acting as an inhibitor of inhibitors of differentiation proteins. Interaction of ID4 was observed with ID1, ID2 and ID3 that was dependent on intact HLH domain of ID4. Interaction with bHLH protein E47 required almost 3 fold higher concentration of ID4 as compared to ID1. Furthermore, inhibition of E47 DNA binding by ID1 was restored by ID4 in an EMSA binding assay. ID4 and ID1 were also colocalized in prostate cancer cell line LNCaP. The alpha helix forming alanine stretch N-terminal, unique to HLH ID4 domain was required for optimum interaction. Ectopic expression of ID4 in DU145 prostate cancer line promoted E47 dependent expression of CDKNI p21. Thus counteracting the biological activities of ID-1, -2 and -3 by forming inactive heterodimers appears to be a novel mechanism of action of ID4. These results could have far reaching consequences in developing strategies to target ID proteins for cancer therapy and understanding biologically relevant ID-interactions.