Osf2/Cbfa1, hereafter called Osf2, is a member of the Runt-related family of transcription factors that plays a critical role during osteoblast differentiation. Like all Runt-related proteins, it contains a runt domain, which is the DNA-binding domain, and a C-terminal proline-serine-threonine-rich (PST) domain thought to be the transcription activation domain. Additionally, Osf2 has two amino-terminal domains distinct from any other Runt-related protein. To understand the mechanisms of osteoblast gene regulation by Osf2, we performed an extensive structure-function analysis. After defining a short Myc-related nuclear localization signal, a deletion analysis revealed the existence of three transcription activation domains and one repression domain. AD1 (for activation domain 1) comprises the first 19 amino acids of the molecule, which form the first domain unique to Osf2, AD2 is formed by the glutamine-alanine (QA) domain, the second domain unique to Osf2, and AD3 is located in the N-terminal half of the PST domain and also contains sequences unique to Osf2. The transcription repression domain comprises the C-terminal 154 amino acids of Osf2. DNA-binding, domain-swapping, and protein interaction experiments demonstrated that full-length Osf2 does not interact with Cbfbeta, a known partner of Runt-related proteins, whereas a deletion mutant of Osf2 containing only the runt and PST domains does. The QA domain appears to be responsible for preventing this heterodimerization. Thus, our results uncover the unique functional organization of Osf2 by identifying functional domains not shared with other Runt-related proteins that largely control its transactivation and heterodimerization abilities.