The Hox genes are clustered in evolutionarily conserved complexes and encode DNA binding proteins that determine positional identity. Ubiquitous expression of fly or mammalian Hox proteins in Drosophila embryos provides an assay for gene function, since different Hox genes induce characteristic homeotic transformations. Drosophila Sex combs reduced (Scr) and its murine cognate Hox-a5 produce identical transformations in transgenic flies. To study the contributions of domains conserved between the two proteins, truncated versions of mouse Hox-a5 were assayed for their ability to activate transcription in cultured cells and to induce homeotic transformation and activate target gene expression in transgenic embryos. The homeodomain is essential for protein function and/or nuclear targeting; the N-terminal region contributes to transcription activity and transformation potential in the embryo, but plays no role in determining functional specificity. The YPWM motif is essential for biological specificity, although it does not contribute to transcriptional activation potential. It was recently shown that the Hox-a5 YPWM motif is necessary for in vitro interactions with the co-factor Pbx1. Our results suggest that this type of protein-protein interaction may be essential for the biological activities of Hox-a5 and Scr.