HAND2 (dHAND) is a basic helix-loop-helix (bHLH)transcription factor expressed in numerous tissues during development including the heart, limbs, and a subset of neural crest derivatives. Functional analysis has shown that HAND2 is involved in development of the branchial arches, heart, limb, vasculature, and nervous system. Although it is essential for development of numerous tissues, little is known about its mode of action. To this end, we have characterized HAND2 transcriptional regulatory mechanisms. Using mammalian onehybrid analysis we show that HAND2 contains a strong transcriptional activation domain in the amino-terminal third of the protein. Like most tissue-restricted bHLH factors, HAND2 heterodimerizes with the broadly expressed bHLH factors, the E-proteins. We determined the consensus DNA binding site of HAND2 and show that HAND2 binds a subset of E-boxes as a heterodimer with E12. Yeast two-hybrid screening of a neuroblastoma cDNA library for HAND2-interacting proteins selected HAND2 and numerous additional members of the E-protein family. Although HAND2 homodimer formation was confirmed by in vitro analysis, HAND2 fails to homodimerize in a mammalian two-hybrid assay but demonstrates robust HAND2/E12 interaction. We conclude that HAND2 functions as a transcription activator by binding a subset of E-boxes as a heterodimer with E-proteins.The basic helix-loop-helix (bHLH) 1 transcription factors comprise a large family of genes that are expressed in a wide array of eukaryotic organisms from yeast to humans (1). They are most often associated with developmental events including lineage determination and differentiation and regulation of tissue-specific genes. Their roles in development and the mechanisms of bHLH protein function have been most extensively studied in the developing myogenic and neural lineages. In these lineages, bHLH factors are essential for all aspects of development from cellular determination through terminal differentiation (reviewed in Refs. 2 and 3).The bHLH family is divided into several classes based on structure, function, and expression pattern during development (2). The distinguishing structural characteristics of this family of transcription factors are a DNA binding basic domain and a helix-loop-helix dimerization domain. In general, these factors regulate transcription through direct binding to DNA in the regulatory regions of genes. Binding of bHLH factors requires dimerization with other members of the bHLH family. Tissue-restricted bHLH factors compose the largest class and generally function by dimerization with a small but broadly expressed class of bHLH factors, the E-proteins. Members of the tissue-restricted class of bHLH factors act to regulate transcription as activators, repressors, or both (3). In addition, transcriptional activity of the tissue restricted bHLH proteins requires association with other bHLH and non-bHLH proteins. For example, the myogenic and neurogenic factors regulate at least partially through direct interaction with histone acetyl tran...