The Drosophila chorion factor 1/ultraspiracle (CF1/USP) transcription factor, a homologue of the retinoid X receptor, is a developmentally important member of the family of nuclear (steroid) hormone receptors. Using newly developed monoclonal antibodies and a full-length bacterially produced protein, we have studied in detail the in vitro DNA-binding properties of this factor and aspects of its distribution in vivo. During oogenesis, CF1/USP is present both in germline cells and in the somatic follicular epithelium. We have determined the optimal binding site of partially purified bacterially produced CF1/USP by an in vitro selection procedure and also have characterized its binding to the follicular-specific chorion s15 promoter. In vitro this bacterially produced factor is unusual in binding to a single element ("half-site"); simultaneous but noncoordinate binding to a second half-site is possible if these repeated elements are organized in direct orientation and spaced adequately. However, the factor interacts synergistically with several other nuclear hormone receptors: notably, it can form in vitro heteromers with mammalian thyroid and retinoic acid receptors, binding to two half-sites that are organized in either direct or inverted orientation. In vivo the factor most probably functions as a heterodimer, but its partner(s) remains to be determined.