Transcription of the three yolk protein genes of Drosophila melanogaster is under strict developmental regulation. Understanding the mechanism of this regulation requires examination of the DNA sequences and protein factors necessary for normal transcriptional control. We have identified a sequence-specific DNA-binding protein, yolk protein factor 1 (YPF1), that has high affinity for a 31-bp sequence in the yolk protein 1 gene. This sequence is within the translated region at a site beginning 148 bp downstream of the transcription initiation site. DNA deletion and substitution analysis demonstrated that this sequence is necessary and sufficient for DNA/YPF1 interaction in vitro and is necessary for normal steady state levels of yolk protein 1 gene RNA in vivo. YPF1 binding activity was detected in extracts from late stage egg chambers and early stage embryos but not from tissues that express yolk protein genes.