As an approach to understanding development in the B lymphocyte lineage, we have characterized transacting factors that mediate lymphoid specific gene transcription. The promoters of all immunoglobulin (lg) variable genes and the Ig heavy chain enhancer contain a critical octamer DNA motif, ATTTGCAT. We demonstrated that this motif, together with a TATA motif, is necessary and sufficient for lymphoid-specific promoter activity. We then assayed nuclear extracts of lymphoid and non-lymphoid cell lines for proteins which specifically bound to the octamer motif and detected two major species: a ubiquitous octamer binding protein (NF-Al) and a lymphoid specific octamer binding protein (NF-A2). We hypothesized that NF-A2 mediated the lymphoid-specific activity of Ig promoters. We have cloned a gene which most likely encodes the human NF-A2 gene by screening a phage lambda gtll expression library with a radiolabelled DNA probe containing the octamer motif. The cloned gene, termed oct-2, encodes an octamer-specific DNA binding protein which is lymphoid-restricted in its expression. This is the first gene to be cloned that encodes a tissue-specific DNA binding protein. The oct-2 gene sequence revealed a 60 amino acid domain that is homologous to the """"""""homeo box"""""""" domain of proteins which are important for cell type determination and development in yeast and Drosophila. This domain of the oct-2 protein was shown to be required for DNA binding by site directed mutagenesis. This represents the first demonstration that a mamalian homeo box gene encodes a sequence-specific DNA binding protein. The presence of the homeo box in the oct-2 gene lends support to the notion that this gene is important for lymphoid development. Recent evidence indicates that the octamer motif may control the expression of other lymphoid-specific genes besides lg, notably the BCL-2 gene involved in the pathogenesis of human follicular lymphomas. Using the cloned oct-2 gene we will be able to determine the range of genes which are expressed exclusively in lymphocytes under the transcriptional control of the octamer motif.