It has been shown previously that the FGF-4 gene is regulated by a powerful downstream enhancer in embryonal carcinoma (EC) cells. This enhancer contains an essential HMG motif; however, the transcription factor that binds to the HMG motif in EC cells has not been determined definitively. In earlier studies, this HMG motif was shown to bind a heat-stable, redox-insensitive factor expressed by F9 EC cells. Others have proposed that the transcription factor Sox-2 binds to the FGF-4 enhancer HMG motif. In this study, we demonstrate that the N-terminal half of Sox-2, which contains the DNA binding domain, binds to the FGF-4 enhancer HMG motif and we show that this binding is unaffected by heat and oxidation. In addition, we employed two experimental approaches to demonstrate that Sox-2 regulates the transcription of the FGF-4 gene in EC cells. As part of these studies, an expression plasmid that codes for a dominant-negative form of Sox-2 was used in transient expression assays. In other experiments, a Sox-2 antisense expression plasmid was used. When co-transfected into F9 EC cells along with an FGF-4 promoter/reporter gene construct, each expression plasmid caused a significant reduction in reporter activity. Our studies also demonstrate that Sox-2 affects the expression of the FGF-4 gene in the multipotent EC cell line, P19. Taken together, these studies argue strongly that Sox-2 plays an important role in the expression of the FGF-4 gene in vivo.