Drosophila homeodomain proteins bind to specific DNA sequences in vitro and are hypothesized to regulate the transcription of other genes during development. Using a cotransfection assay, we have shown that homeodomain proteins encoded by the homeotic gene Antennapedia (Antp) and the segmentation gene fushi tarazu, as well as a hybrid homeodomain protein, are activators of transcription from specific promoters in cultured Drosophila cells. Sequences downstream of the Antp P1 and Ultrabithorax transcription start sites mediate the observed activation. A TAA-rich DNA sequence to which the Antp protein binds in vitro is sufficient to confer regulation on a heterologous promoter. The results demonstrate that homeodomain proteins are transcriptional regulators in vivo and that in cultured cells, different homeodomain-containing proteins can act upon a common sequence to modulate gene transcription.