Prophet of Pit-1 (PROP1) is a homeodomain transcription factor essential for development of the mammalian anterior pituitary gland. Studies of human patients and animal models with mutations in their Prop1 genes have established that PROP1 is required for the correct development or sustained function of the hormone-secreting cells that regulate physiological pathways controlling growth, reproduction, metabolism, and the stress response. By comparative analysis of mammalian Prop1 genes and their encoded proteins, including cloning the ovine Prop1 gene and its products, we demonstrate that two conserved basic regions (B1 and B2) of the PROP1 protein located within the homeodomain are required for nuclear localization, DNA binding, and target gene activation. Interestingly, missense mutations in the human Prop1 gene causing amino acid changes in both the B1 and B2 regions have been associated with combined pituitary hormone deficiency (CPHD) diseases, suggesting that disruption of nuclear localization may be part of the molecular basis of such diseases. The ovine Prop1 gene has three exons and two introns, a different structure compared with that of the bovine gene. Two alleles of the ovine gene were found to encode protein products with different carboxyl terminal domain sequences. We demonstrate that the two alleles are distributed in different breeds of sheep. Finally, we show for the first time that the PROP1 protein is associated with the nuclear matrix.