The dorsal (dl) protein gradient determines patterns of gene expression along the dorsal-ventral axis of the Drosophila embryo. dl protein is at peak levels in ventral nuclei of the embryo where it activates some genes (twist and snail) and represses others [zerknullt (zen), decapentaplegic and tolloid]. It is a member of the rel family of transcription factors and interacts with specific DNA sequences in the regulatory regions of its target genes. These sequences (dl binding sites), when taken from the context of either an activated or repressed promoter, mediate transcriptional activation of a heterologous promoter, but not repression. We found that T-rich sequences close to the dl binding sites in the silencer region of the zen promoter are conserved between three Drosophila species. Using this sequence information we defined a minimal element that can mediate repression of a heterologous promoter. This element interacts with at least two factors present in embryonic extracts, one of which is dl protein. The other factor binds to the T-rich site. Point mutations in either site abolish ventral repression in vivo. In addition, mutations in the T-rich site cause ectopic expression in ventral regions indicating that the minimal silencer was converted into an enhancer.