The SALL (Spalt-like) family of zinc-finger transcription factors is conserved in metazoans. In Drosophila Sal (Spalt) and Salr (Spalt-related) control the expression of genes involved in wing and central nervous system development, including cell adhesion and cytoskeletal proteins. In humans, SALL mutations associate with congenital disorders such as the Townes-Brocks and Okihiro syndromes. Human and Drosophila SALL proteins are modified by SUMO (small ubiquitin-related modifier), which influences their subnuclear localization. In the present study, we have analysed the transcriptional activity of Drosophila Sall proteins in cultured cells. We show that both Sal and Salr act as transcriptional repressors in Drosophila cells where they repress transcription through an AT-rich sequence. Furthermore, using the UAS/Gal4 heterologous system, Drosophila Sal and Salr repress transcription in human cells. Under our experimental conditions, only in the case of Salr is the repression activity dependent on the HDAC (histone deacetylase) complex. This complex might interact with the C-terminal zinc fingers of Salr. We describe the differential subcellular localizations of Sal and Salr fragments and identify their repression domains. Surprisingly, both repressors also contain transcription activation domains. In addition, under our experimental conditions SUMOylation has differential effects on Sal and Salr repressor activity. Phylogenetic comparison between nematodes, insects and vertebrates identifies conserved peptide sequences that are presumably critical for SALL protein function.