Homeotic genes of Drosophila melanogaster such as Ultrabithorax (Ubx) and Antennapedia (Antp) have long been thought to select metameric identity during development by controlling the expression of various target genes. Here we describe a cotransfection assay in cultured D. melanogaster cells that is used to demonstrate that Ubx proteins (UBX) can repress an Antp promoter fusion and activate a Ubx promoter fusion, activities predicted from genetic studies. We show (a) that UBX proteins regulated the level of accurately initiated Antp P1 and Ubx transcripts, (b) that activation of the Ubx promoter required a downstream cluster of UBX binding sites, and (c) that binding site sequences were sufficient to confer regulation on a heterologous promoter, regardless of their orientation or precise position. We conclude that UBX proteins are transcriptional repressors and activators, and that their actions are mediated by binding to promoter region sequences. Each member of the UBX protein family has similar regulatory abilities, but the properties of synthetic mutant forms suggest that UBX proteins may have a modular design similar to other transcriptional regulators.