The development of the metanephric kidney proceeds through reciprocal interactions between the metanephric mesenchyme and the ureteric bud. One important molecule mediating this interaction is the glial cell line-derived neurotrophic factor Gdnf, which is secreted by the mesenchymal cells. Regulation of Gdnf expression is largely unknown. We show here that a member of the Six family of homeobox containing transcription factors, namely Six2 activates Gdnf expression. We have identified two Six2 binding sites in the Gdnf promoter that show similarity to the consensus DNA binding sequences of other homeobox proteins and harbor short palindromic sequences. Furthermore, we have characterized the Six2 protein and show that Six2 possesses a transcriptional activation domain in the C-terminus and nuclear localization determinants in the Six domain. In order to identify factors which activate expression of Six2, particularly in the metanephric mesenchyme during early kidney development we have cloned and characterized a 930 bp fragment of the murine Six2 promoter. Transgenic mice harboring a construct in which the LacZ gene is driven by the Six2 promoter fragment revealed LacZ expression at multiple sites which overlap with endogenous Six2 expression. Surprisingly, Six2 bound and activated this 930 bp fragment. The architecture of the binding sites in the Six2 promoter, but not the binding sequence itself, is very similar to the one in the Gdnf promoter. The identification of two target genes and our biochemical characterization suggest a critical role for Six2 in kidney development.