The continually renewing epithelium of the intestinal tract arises from the visceral endoderm by a series of complex developmental transitions. The mechanisms that establish and maintain the processes of cellular renewal, cell lineage allocation, and tissue restriction and spatial assignment of gene expression in this epithelium are unknown. An understanding of the regulation of intestine-specific gene regulation may provide information on the molecular mechanisms that direct these processes. In this regard, we show that intestine-specific transcription of sucrase-isomaltase, a gene that is expressed exclusively in differentiated enterocytes, is dependent on binding of a tissue-specific homeodomain protein (mouse Cdx-2) to an evolutionarily conserved promoter element in the sucrase-isomaltase gene. This protein is a member of the caudal family of homeodomain genes which appear to function in early developmental events in Drosophila melanogaster, during gastrulation in many species, and in intestinal endoderm. Unique for this homeodomain gene family, we show that mouse Cdx-2 binds as a dimer to its regulatory element and that dimerization in vitro is dependent on redox potential. These characteristics of the interaction of Cdx-2 with its regulatory element provide for a number of potential mechanisms for transcriptional regulation. Taken together, these findings suggest that members of the Cdx gene family play a fundamental role both in the establishment of the intestinal phenotype during development and in maintenance of this phenotype via transcriptional activation of differentiated intestinal genes.