B-cell-specific transcription of immunoglobulin genes is mediated by the interaction of a POU domain containing transcription factor Oct-1 or Oct-2, with the B-cell-specific coactivator OCA-B (Bob-1, OBF-1) and a prototype octamer element. We find that OCA-B binds DNA directly in the major groove between the two subdomains of the POU domain, requiring both an A at the fifth position of the octamer element and contact with the POU domain. An amino-terminal fragment of OCA-B binds the octamer site in the absence of a POU domain with the same sequence specificity. Coactivator OCA-B may undergo a POU-dependent conformational change that exposes its amino terminus, allowing it to recognize specific DNA sequences in the major groove within the binding site for Oct-1 or Oct-2. The recognition of both the POU domain and the octamer sequence by OCA-B provides a mechanism for differential regulation of octamer sites containing genes by the ubiquitous factor Oct-1.