The TAR RNA binding Protein, TRBP, inhibits the activity of the interferon-induced protein kinase R (PKR), whereas the PKR activator, PACT, activates its function. TRBP and PACT also bind to each other through their double-stranded RNA binding domains (dsRBDs) and their Medipal domains, which may influence their activity on PKR. In a human immunodeficiency virus (HIV) long terminal repeat-luciferase assay, PACT unexpectedly reversed PKR-mediated inhibition of gene expression. In a translation inhibition assay in HeLa cells, PACT lacking the 13 C-terminal amino acids (PACTDelta13), but not full-length PACT, activated PKR and enhanced interferon-mediated repression. In contrast, in the astrocytic U251MG cells that express low TRBP levels, both proteins activate PKR, but PACTDelta13 is stronger. Immunoprecipitation assays and yeast two-hybrid assays show that TRBP and PACTDelta13 interact very weakly due to a loss of binding in the Medipal domain. PACT-induced PKR phosphorylation was restored in Tarbp2(-/-) murine tail fibroblasts and in HEK293T or HeLa cells when TRBP expression was reduced by RNA interference. In HEK293T and HeLa cells, arsenite, peroxide, and serum starvation-mediated stresses dissociated the TRBP-PACT interaction and increased PACT-induced PKR activation, demonstrating the relevance of this control in a physiological context. Our results demonstrate that in cells, TRBP controls PACT activation of PKR, an activity that is reversed by stress.