Metazoans encode clusters of paralogous Hox genes that are critical for proper development of the body plan. However, there are a number of unresolved issues regarding how paralogous Hox factors achieve specificity to control distinct cell fates. First, how do Hox paralogs, which have very similar DNA binding preferences in vitro, drive different transcriptional programs in vivo? Second, the number of potential Hox binding sites within the genome is vast compared to the number of sites bound. Hence, what determines where in the genome Hox factors bind? Third, what determines whether a Hox factor will activate or repress a specific target gene? Here, we review the current evidence that is beginning to shed light onto these questions. In particular, we highlight how cooperative interactions with other transcription factors (especially PBC and HMP proteins) and the sequences of cis-regulatory modules provide a basis for the mechanisms of Hox specificity. We conclude by integrating a number of the concepts described throughout the review in a case study of a highly interrogated Drosophila cis-regulatory module named “The Distal-less Conserved Regulatory Element” (DCRE).