T-box genes encode a family of phylogenetically conserved DNA-binding proteins that regulate gene expression during embryogenesis. While the developmental importance of many T-box genes has been well documented, little is known about how family members differ in their DNA binding properties and ability to modulate transcription. Here we show that although TBX1, TBX2 and the Xenopus T protein (Xbra) share only 50-60% identity within their DNA-binding domains they can bind the same DNA sequence in vitro. However, the proteins differ in three important respects. While TBX1 protein binds a palindromic T oligonucleotide as a dimer, as had been previously reported for Xbra, TBX2 appears to bind the same DNA sequence as a monomer. Also, T protein/DNA complexes are stabilized in vitro by the addition of specific antibodies, whereas TBX2/DNA complexes are not stabilized by antibodies. Most importantly, TBX2 represses while Xbra activates transcription of the same chimeric reporter plasmid. TBX1, although capable of binding to the chimeric promoter, has no effect on transcription. Thus, while the DNA binding domains of T-box proteins share substantial homology, these proteins differ in both their DNA binding and transcriptional modulation properties. These results suggest that the various T-box proteins, while highly conserved, likely use different mechanisms to modulate transcription and may have different targets in vivo.