vHNF1 and HNF1 are two nuclear proteins that bind to an essential element in the promoter proximal sequences of albumin and of many other liver-specific genes. HNF1 predominates in hepatocytes but is absent in dedifferentiated hepatoma cells. These cells contain vHNF1 but fail to express most of the liver traits. In the present work we have isolated cDNA clones for vHNF1 and found that it is a homeoprotein homologous to HNF1 in regions important for DNA binding. Unexpectedly, vHNF1 transactivated the albumin promoter in transfection experiments. Like the HNF1 mRNA, the vHNF1 message was found in kidney, liver and intestine although in different proportions. The fact that vHNF1 and HNF1 readily form heterodimers in vitro and the biochemical characterization of vHNF1/HNF1 heterodimers in nuclear extracts of kidney, liver and several cell lines, strongly argue that such heterodimers exist in vivo. Our results raise the possibility that heterodimerization between homeoproteins could be a common phenomenon in higher eukaryotes, which may have implications in the regulatory network sustained between these factors.