Somatic sex determination in Drosophila depends on the expression of Sex-lethal (Sxl), whose level is determined by the relative number of X chromosomes and sets of autosomes (X:A ratio). The first step in regulation of Sxl expression is transcriptional control from its early promoter and several genes encoding transcription factors of the helix-loop-helix (HLH) family such as daughterless (da), sisterless-b (sis-b), deadpan (dpn) and extramacrochaetae (emc) have been implicated. By the use of transfection assays and in vitro binding experiments, here we show that da/sis-b heterodimers bind several sites on the Sxl early promoter with different affinities and consequently tune the level of active transcription from this promoter. Interestingly, our data indicate that repression by the dpn product of da/sis-b dependent activation results from specific binding of dpn protein to a unique site within the promoter. This contrasts with the mode of emc repression, which inhibits the formation of the da/sis-b heterodimers. These results reveal the molecular mechanisms by which Sxl gene transcription is positively or negatively regulated to control somatic sex determination.