The product of the fushi tarazu (ftz) gene is shown to be a site-dependent activator of transcription. In vitro-defined binding sites act as ftz-dependent enhancers in cultured cells. Another homoeodomain-containing protein, the engrailed gene product, competes for homoeodomainbinding sites and counteracts ftz activation.GENETIC analysis in Drosophila melanogaster has identified a group of regulatory genes that participate in embryonic pattern formation 1,2 . Many of these genes encode a 60 amino-acid sequence, the homoeodomain, that is highly conserved through evolution [3][4][5] . This domain contains a putative helix-turn-helix motif 6 such as that found in a number of bacterial regulators 7 , and possesses a sequence-specific DNA-binding activity 8,9 . Numerous regulatory interactions occur among homoeodomain-encoding genes during development. For example, a combination of segmentation and homoeotic gene products, many of which contain homoeodomains 1 , specify the developmental fates of cells in striped patterns 10,11 . Furthermore, homoeodomain-containing proteins (homoeodomain proteins) regulate both each other 12 and downstream (`cytodifferentiation' 13 ) genes. Consequently, it has been attractive to think of homoeodomain proteins as direct regulators of transcription. Due to the complexity of cross-regulatory interactions however, mutations altering or eliminating one homoeodomain protein generally change the expression patterns of many other regulators, confounding efforts to distinguish direct from indirect regulation. Additionally, suspected target genes contain large cis-acting control regions that respond, directly or indirectly, to complex combinations of regulators [14][15][16][17] . As a result, identification of target genes directly regulated by homoeodomain proteins has been problematic.Previous studies have documented instances in which homoeodomain proteins control transcription. The enhancer activity of a DNA fragment from the ftz gene, a homoeodomaincontaining member of the pair-rule class of segmentation genes, suggested that the ftz gene product (ftz) activates its own expression in the embryo 18 . In a different approach a Drosophila tissue culture system was used to show that the Ultrabithorax (Ubx) gene product induces expression of its own promoter, and inhibits the Antennapedia (Antp) (P1) promoter (M. Krasnow and D. S. Hogness, personal communication, see ref. 19 for summary). In these cases however, the complexity of the regulatory circuitry and of the responding control regions leaves open the possibility that the homoeodomain proteins produce these transcriptional effects through intermediaries. To circumvent the complexities of natural target genes, we chose to use binding sites identified in vitro to build homoeodomain-responsive promoters. We find that ftz is a potent activator of transcription from these promoters in cultured cells.During sequential subdivision of the Drosophila embryo to produce segmentally repeating patterns, combinations of regulatory gene prod...