Transcription factors of the Pax family bind to their target genes via the paired domain which is known to be composed of two subdomains each recognizing distinct half-sites in adjacent major grooves of the DNA helix. We now demonstrate that the mammalian Pax8 gene gives rise, by alternative mRNA splicing, to a protein isoform containing an extra serine residue in the recognition alpha-helix 3 of the paired domain. This Pax8(S) protein does not interact with bipartite paired domain-binding sites, indicating that inactivation of the N-terminal DNA-binding motif severely restricts the sequence specificity of the paired domain. However, the Pax8(S) protein binds in vitro and in vivo to the 5aCON sequence which was previously identified as a high-affinity binding site for the Pax6(5a) splice variant carrying a 14-amino-acid insertion in the paired domain. The 5aCON sequence is shown to consist of four interdigitated 5' half-sites of the bipartite consensus sequence and is thus bound by four Pax8(S) molecules via the intact C-terminal DNA-binding motif of the paired domain. Together these data suggest that inactivation of the N-terminal region of the paired domain by alternative splicing is used in vivo to selectively target Pax transcription factors to gene regulatory regions containing highly specialized 5aCON-like sequences.