Id1, a helix-loop-helix (HLH) protein which lacks a DNA binding domain, has been shown to negatively regulate other members of the HLH family by direct protein-protein interactions, both in vitro and in vivo. In this study, we report the results of site-directed mutagenesis experiments aimed at defining the regions of Id1 which are important for its activity. We have found that the HLH domain of Id1 is necessary and nearly sufficient for its activity. In addition, we show that two amino acid residues at the amino terminus of the Id1 loop are critical for its activity, perhaps by specifying the correct dimerization partners. In this regard, replacing the first four amino acids of the loops of the basic HLH proteins E12 and E47 with the corresponding amino acids of Id1 confers Id1 dimerization specificity. These studies point to the loop region as an important structural and functional element of the Id subfamily of HLH proteins.