UTF1 is a transcriptional coactivator which has recently been isolated and found to be expressed mainly in pluripotent embryonic stem (ES) cells (A. Okuda, A. Fukushima, M. Nishimoto, et al., EMBO J. 17:2019-2032, 1998). To gain insight into the regulatory network of gene expression in ES cells, we have characterized the regulatory elements governing UTF1 gene expression. The results indicate that the UTF1 gene is one of the target genes of an embryonic octamer binding transcription factor, Oct-3/4. UTF1 expression is, like the FGF-4 gene, regulated by the synergistic action of Oct-3/4 and another embryonic factor, Sox-2, implying that the requirement for Sox-2 by Oct-3/4 is not limited to the FGF-4 enhancer but is rather a general mechanism of activation for Oct-3/4. Our biochemical analyses, however, also reveal one distinct difference between these two regulatory elements: unlike the FGF-4 enhancer, the UTF1 regulatory element can, by its one-base difference from the canonical octamer-binding sequence, selectively recruit the complex comprising Oct-3/4 and Sox-2 and preclude the binding of the transcriptionally inactive complex containing Oct-1 or Oct-6. Furthermore, our analyses reveal that these properties are dictated by the unique ability of the Oct-3/4 POU-homeodomain that recognizes a variant of the Octamer motif in the UTF1 regulatory element.