Expression of the Drosophila orphan nuclear receptor DHR78 is regulated by the steroid hormone ecdysone and is required for growth and viability during larval stages. In contrast to our understanding of its biological functions, however, relatively little is known about how DHR78 acts as a transcription factor. Here we show that DHR78 is an obligate partner for Moses (Middleman of seventy-eight signaling), a SAM (sterile alpha motif) domain-containing cofactor that requires DHR78 for its stability. Unlike other nuclear receptor cofactors, Moses has no obvious interaction domains and displays a unique binding specificity for DHR78. Moses acts as a corepressor, inhibiting DHR78 transcriptional activity independently of histone deacetylation. Consistent with their close association, DHR78 and Moses proteins are coexpressed during development and colocalize to specific genomic targets in chromatin. Moses mutants progress normally through early larval stages, like DHR78 mutants, but display an opposite overgrowth phenotype, with hypertrophy of adult tissues. Genetic interactions between DHR78 and moses result in a similar phenotype, suggesting that the relative dose of Moses and DHR78 regulates growth and prevents cancer. The tight functional association between DHR78 and Moses provides a new paradigm for understanding the molecular mechanisms by which cofactors modulate nuclear receptor signaling pathways.