Mutations in the DAX-1 gene are responsible for congenital X-linked adrenal hypoplasia, a disease that is associated with hypogonadotropic hypogonadism. DAX-1 expression is tissue-specific and is finely regulated throughout development, suggesting that it has a role in both adrenal and gonadal function. DAX-1 is an unusual member of the nuclear-receptor superfamily of transcription factors which contains no canonical zinc-finger or any other known DNA-binding motif. Binding sites for DAX-1 are found in the promoters of the dax-1 and StAR (for steroidogenic acute regulatory protein) genes. Here we show that DAX-1 binds DNA and acts as a powerful transcriptional repressor of StAR gene expression, leading to a drastic decrease in steroid production. We provide in vitro and in vivo evidence that DAX-1 binds to DNA hairpin structures. Our results establish DAX-1 as the first member of the nuclear receptor superfamily with novel DNA-binding features and reveal that it has regulatory properties critical to the understanding of its physiological functions.