Sox10 is an important transcriptional regulator in the neural crest and various neural-crest derived lineages, such as the Schwann cells of the peripheral nervous system. Recently, we identified the gene for myelin Protein zero (P(0)) as a transcriptional target of Sox10 in Schwann cells, allowing for the first time a detailed analysis of Sox10 responsive elements and their functional interaction with Sox10. Here we show that Sox10 functions through two different types of DNA response elements, one that allows binding of monomers, and a second that favors cooperative binding of two molecules. This dimeric binding required the presence of two heptameric Sox binding sites in a specific orientation and spacing, and was mediated by an N-terminal region of Sox10 with high conservation in the related Sox9, which also exhibited dimeric binding. This argues that the conserved region has the capacity to function as a DNA-dependent dimerization domain. The interaction between Sox10 dimers and DNA differed dramatically from that of Sox10 monomers, as it drastically reduced the protein's off-rate and increased the protein-induced angle of DNA bending. These results indicate that functionally relevant interactions between Sox10 and DNA occur through completely different modes of binding.