LIM domains mediate protein-protein interactions and, within LIM-homeodomain proteins, act as negative regulators of the transcriptional activation function of the protein. The recently described protein Ldb1 (also known as NLI; LIM domain-binding protein) binds LIM domains in vitro and synergizes with the LIM-homeodomain protein Xlim-1 in frog embryo microinjection experiments. In this study we localized the transcriptional activation domain of Xlim-1 to its carboxyl-terminal region, and characterized the interactions of the amino-terminally located LIM domains with Ldb1. Ldb1 binds LIM domains through its carboxyl-terminal region, and can form homodimers via its amino-terminal region. Optimal binding to Ldb1 required tandem LIM domains, while single domains could bind at lower but clearly measurable efficiency. In animal explant experiments, synergism of Ldb1 with Xlim-1 in the activation of downstream genes required both the region containing the dimerization domain of Ldb1 and the region containing the LIM-binding domain. The role of Ldb1 may be to recruit other transcriptional activators depending on the promoter context and LIM-homeodomain partner involved.