Hes and Hey genes are the mammalian counterparts of the Hairy and Enhancer-of-split type of genes in Drosophila and they represent the primary targets of the Delta-Notch signaling pathway. Hairy-related factors control multiple steps of embryonic development and misregulation is associated with various defects. Hes and Hey genes (also called Hesr, Chf, Hrt, Herp or gridlock) encode transcriptional regulators of the basic helix-loop-helix class that mainly act as repressors. The molecular details of how Hes and Hey proteins control transcription are still poorly understood, however. Proposed modes of action include direct binding to N- or E-box DNA sequences of target promoters as well as indirect binding through other sequence-specific transcription factors or sequestration of transcriptional activators. Repression may rely on recruitment of corepressors and induction of histone modifications, or even interference with the general transcriptional machinery. All of these models require extensive protein-protein interactions. Here we review data published on protein-protein and protein-DNA interactions of Hairy-related factors and discuss their implications for transcriptional regulation. In addition, we summarize recent progress on the identification of potential target genes and the analysis of mouse models.