A monkey kidney cDNA that encodes a nuclear regulatory factor was identified by expression and affinity binding to a synthetic retinoic acid response element (RARE) and was used to isolate human placental and rat germ cell cDNAs by hybridization. The cDNAs encode a 59-kDa protein [nuclear DEAF-1-related (NUDR)] which shows sequence similarity to the Drosophila Deformed epidermal autoregulatory factor-1 (DEAF-1), a nonhomeodomain cofactor of embryonic Deformed gene expression. Similarities to other proteins indicate five functional domains in NUDR including an alanine-rich region prevalent in developmental transcription factors, a domain found in the promyelocytic leukemia-associated SP100 proteins, and a zinc finger homology domain associated with the AML1/MTG8 oncoprotein. Although NUDR mRNA displayed a wide tissue distribution in rats, elevated levels of protein were only observed in testicular germ cells, developing fetus, and transformed cell lines. Nuclear localization of NUDR was demonstrated by immunocytochemistry and by a green fluorescent protein-NUDR fusion protein. Site-directed mutagenesis of a nuclear localization signal resulted in cytoplasmic localization of the protein and eliminated NUDR-dependent transcriptional activation. Recombinant NUDR protein showed affinity for the RARE in mobility shifts; however it was efficiently displaced by retinoic acid receptor (RAR)/retinoid X receptor (RXR) complexes. In transient transfections, NUDR produced up to 26-fold inductions of a human proenkephalin promoter-reporter plasmid, with minimal effects on the promoters for prodynorphin or thymidine kinase. Placement of a RARE on the proenkephalin promoter increased NUDR-dependent activation to 41-fold, but this RARE-dependent increase was not transferable to a thymidine kinase promoter. Recombinant NUDR protein showed minimal binding affinity for proenkephalin promoter sequences, but was able to select DNA sequences from a random oligonucleotide library that had similar core-binding motifs (TTCG) as those recognized by DEAF-1. This motif is also present between the half-sites of several endogenous RAREs. The derived consensus- binding motif recognized by NUDR (TTCGGGNNTTTCCGG) was confirmed by mobility shift and deoxyribonuclease I (DNase I) protection assays; however, the consensus sequence was also unable to confer NUDR-dependent transcriptional activation to the thymidine kinase promoter. Our data suggests that NUDR may activate transcription independently of promoter binding, perhaps through protein-protein interaction with basal transcription factors, or by activation of secondary factors. The sequence and functional similarities between NUDR and DEAF-1 suggest that NUDR may also act as a cofactor to regulate the transcription of genes during fetal development or differentiation of testicular cells.