Msx2 is a mammalian homeodomain protein that is expressed during craniofacial development. A proline-to-histidine substitution at residue 148 of human Msx2 results in an autosomal dominant form of craniosynostosis. In this study, both wild-type and mutant Msx2 were shown to specifically bind to a DNA sequence previously identified as a high-affinity binding site for the related homeodomain protein Msx1. In co-transfection assays both wild-type and mutant Msx2 repressed reporter gene transcription in a dose-dependent but binding-site-independent manner. These results provide evidence that Msx2 is a transcriptional repressor and suggest that the mutant form of Msx2 may exert its pathophysiologic effects on craniofacial development by a gain-of-function mechanism.