Various kinds of maternal factor that play crucial roles in embryogenesis are present and localized in the ascidian egg cytoplasm. Localized maternal mRNA of the macho-1 gene is a muscle determinant in the embryo of the ascidian Halocynthia roretzi. The macho-1 protein has a zinc-finger domain and accumulates in nuclei, being expected to function as a DNA-binding transcription factor. In the present study, we show that macho-1 is, indeed, a DNA-binding transcriptional activator, and directly or indirectly regulates the expression of six downstream genes. Macho-1 was required and sufficient for expression of the muscle actin, myosin, calcium transporter, myogenic factor, Tbx6, and snail genes, whose expression is initiated in muscle blastomeres at the cleavage stages in normal embryos. Furthermore, when macho-1 conjugated with a transcription-repression domain of Drosophila engrailed (En(R)) was expressed in embryos, it repressed expression of these downstream genes. In contrast, expression of macho-1 fused with a transcription-activation domain of VP16 caused ectopic expression of these muscle genes in non-muscle blastomeres. PCR-assisted binding-site selection and gel-retardation assay showed that macho-1 protein binds to the consensus target sequence (TGGGTGGTC) for GLI/Zic-family proteins, and that three guanine residues with underlines are crucial for the specificity. The 5' promoter region of the muscle actin gene supported expression of the reporter gene only in muscle cells at late stage. By contrast, when the target sequence was added to the promoter, it well reproduced early expression of muscle actin at the cleavage stage, indicating that macho-1 can recognize the target sequence in vivo. In conclusion, the maternal muscle determinant macho-1 functions as a transcription factor that positively regulates gene expression for muscle formation in ascidian embryos.