The transcriptional mechanisms underlying tooth development are only beginning to be understood. Pitx2, a bicoid-like homeodomain transcription factor, is the first transcriptional marker observed during tooth development. Because Pitx2, Msx2, and Dlx2 are expressed in the dental epithelium, we examined the transcriptional activity of PITX2 in concert with Msx2 and the Dlx2 promoter. PITX2 activated while Msx2 unexpectedly repressed transcription of a TK-Bicoid luciferase reporter in a tooth epithelial cell line (LS-8) and CHO cell line. Surprisingly, Msx2 binds to the bicoid element (5'-TAATCC-3') with a high specificity and competes with PITX2 for binding to this element. PITX2 binds to bicoid and bicoid-like elements in the Dlx2 promoter and activates this promoter 45-fold in CHO cells. However, it is only modestly activated in the LS-8 tooth epithelial cell line that endogenously expresses Msx2 and Pitx2. RT-PCR and Western blot assays reveal that two Pitx2 isoforms are expressed in the LS-8 cells. We further demonstrate that PITX2 dimerization can occur through the C-terminus of PITX2. Msx2 represses the Dlx2 promoter in CHO cells and coexpression of both PITX2 and Msx2 resulted in transcriptional antagonism of the Dlx2 promoter. Electrophoretic mobility shift assays demonstrate that factors in the LS-8 cell line specifically interact with PITX2. Thus, Dlx2 gene transcription is regulated by antagonistic effects between PITX2, Msx2, and factors expressed in the tooth epithelia.