We have studied the transcriptional activity of the Drosophila homeodomain protein Engrailed (En) by using a transient expression assay employing Schneider L2 cells. En was found to very strongly repress promoters activated by a variety of different activator proteins. However, unlike another Drosophila homeodomain-containing repressor, Even-skipped (Eve), En was unable to repress the activity of several basal promoters in the absence of activator expression. These findings indicate that En is a specific repressor of activated transcription, and suggest that En may repress transcription by a different mechanism than Eve, perhaps by interfering with interactions between transcriptional activators and the general transcription machinery. By analyzing the properties of a variety of En mutants, we identified a minimal repression domain composed of 55 residues, which can function when fused to a heterologous DNA binding domain. Like repression domains identified in the Drosophila repressors Eve and Krüppel, the En repression domain is rich in alanine residues (26%), but unlike these other domains, is moderately charged (six arginine and three glutamic acid residues). Separate regions of En that may in some circumstances function in transcriptional activation were also identified.