In this paper, we propose a functional view on the in silico prediction of transcriptional regulation. We present a method to predict biological functions regulated by a combinatorial interaction of transcription factors. Using a rigorous statistic, this approach intersects the presence of transcription factor binding sites in gene upstream sequences with Gene Ontology terms associated with these genes. We demonstrate that for the well-studied set of skeletal muscle-related transcription factors Myf-2, Mef and TEF, the correct functions are predicted. Furthermore, starting from the well-characterized promoter of a gene expressed upon lipopolysaccharide stimulation, we predict functional targets of this stimulus. These results are in excellent agreement with microarray data.