HOX homeoproteins control cell identities during animal development by differentially regulating target genes. The homeoprotein encoded by the extradenticle (exd) gene can selectively modify HOX DNA binding, suggesting that it contributes to HOX specificity in vivo. HOX-EXD interactions are in part mediated by a conserved stretch of amino acids termed the hexapeptide found in many HOX proteins. Here, we demonstrate that a 20 bp oligonucleotide from the 5' region of the mouse Hoxb-1 gene, a homolog of Drosophila labial (lab), is sufficient to direct an expression pattern in Drosophila that is very similar to endogenous lab. In vivo, this expression requires lab and exd and, in vitro, LAB requires EXD to bind this oligonucleotide. In contrast, LAB proteins with mutations in the hexapeptide bind DNA even in the absence of EXD. Moreover, a hexapeptide mutant of LAB has an increased ability to activate transcription in vivo. Partial proteolysis experiments suggest that EXD can induce a conformational change in LAB. These data are consistent with a mechanism whereby the LAB hexapeptide inhibits LAB function by inhibiting DNA binding and that an EXD-induced conformational change in LAB relieves this inhibition, promoting highly specific interactions with biologically relevant binding sites.