The fluffy (fl) gene of Neurospora crassa is required for asexual sporulation and encodes an 88 kDa polypeptide containing a typical fungal Zn2Cys6 DNA-binding motif. Identification of genes regulated by fl will provide insight into how fungi regulate growth during morphogenesis. As a step towards identifying the target genes on which FL may act, we sought to define target sequences to which the FL protein binds. The DNA binding domain of FL was expressed in Escherichia coli as a fusion with glutathione S-transferase (GST) and purified using glutathione-sepharose affinity chromatography. The DNA binding sites were selected and amplified by means of a polymerase chain reaction (PCR)-mediated random-site selection method involving affinity bead-binding and gel mobility shift analysis. Sequencing and comparison of the selected clones suggested that FL binds to the motif 5'-CGG(N)9CCG-3'. A potential binding site was found in the promoter region of the eas (ccg-2) gene, which encodes a fungal hydrophobin. In vitro competitive binding assays revealed a preferred binding site for FL in the eas promoter, 5'-CGGAAGTTTC CTCCG-3', which is located 1498 bp upstream of the eas translation initiation codon. In vivo experiments using a foreign DNA sequence tag also confirmed that this sequence resides in a region required for FL regulation. In addition, yeast one hybrid experiments demonstrated that the C-terminal portion of FL functions in transcriptional activation. Transcriptional profiling was used to identify additional potential targets for regulation by fl.