The cellular transcription factor USF is involved in the regulation of both cellular and viral genes and consists of 43- and 44-kDa polypeptides which independently show site-specific DNA binding. Cloning of the corresponding cDNA revealed that the 43-kDa polypeptide (USF43) is a member of the basic (B)-helix-loop-helix (HLH)-leucine zipper (LZ) family of proteins and provided a means for its functional dissection. Initial structure-function studies revealed that the HLH and LZ regions are both important for USF43 oligomerization and DNA binding. The studies presented here have focused on the determination of domains that contribute to transcriptional activation in vitro and show that (i) both a small region close to the N terminus and a region between residues 93 and 156 contribute strongly to transcriptional activation, (ii) full activation depends on the presence of both domains, (iii) the B-HLH-LZ region has no intrinsic activation potential but DNA binding is absolutely required for transcriptional activation, and (iv) the B-HLH-LZ region can be replaced by the Gal4 DNA binding domain without loss of activation potential.