The transcription factor lymphoid enhancer factor 1 (LEF-1) is directed to the nucleus by a nine-amino-acid nuclear localization signal (NLS; KKKKRKREK) located in the high-mobility-group DNA binding domain. This NLS is recognized by two armadillo repeat proteins (pendulin/Rch1/alpha-P1/hSrp1alpha and Srp1/karyopherin-alpha/alpha-S1/NPI-1) which function in nuclear transport as the importin-alpha subunit of NLS receptors. T-cell factor 1 (TCF-1), a related transcription factor, contains a similar sequence (KKKRRSREK) in the identical position within its HMG DNA binding domain. We show that this sequence functions as an NLS in vivo but is not recognized by these two importin-alpha subtypes in a yeast two-hybrid assay and only weakly recognized in an in vitro binding assay. Transfer of the LEF-1 NLS to TCF-1 can confer pendulin/Rch1 binding, demonstrating that the NLS is the primary determinant for recognition. We have constructed a set of deletion mutations in pendulin/Rch1 to examine the differential NLS recognition more closely. We find that the entire armadillo repeat array of pendulin/Rch1 is necessary to maintain high affinity and specificity for the LEF-1 NLS versus the TCF-1 NLS. Importin-beta, the second subunit of the NLS receptor complex, does not influence in vitro NLS binding affinity or specificity. To test whether this differential recognition is indicative of distinct mechanisms of nuclear transport, the subcellular localization of LEF-1 and TCF-1 fused to green fluorescent protein (GFP)) was examined in an in vitro nuclear transport assay. GFP-LEF-1 readily localizes to the nucleus, whereas GFP-TCF-1 remains in the cytoplasm. Thus, LEF-1 and TCF-1 differ in several aspects of nuclear localization.