Most transcription factors act either as activators or repressors, and no such factors with dual function have been unequivocally identified and characterized in plants. We demonstrate here that the Arabidopsis thaliana protein WUSCHEL (WUS), which regulates the maintenance of stem cell populations in shoot meristems, is a bifunctional transcription factor that acts mainly as a repressor but becomes an activator when involved in the regulation of the AGAMOUS (AG) gene. We show that the WUS box, which is conserved among WOX genes, is the domain that is essential for all the activities of WUS, namely, for regulation of stem cell identity and size of floral meristem. All the known activities of WUS were eliminated by mutation of the WUS box, including the ability of WUS to induce the expression of AG. The mutation of the WUS box was complemented by fusion of an exogenous repression domain, with resultant induction of somatic embryogenesis in roots and expansion of floral meristems as observed upon ectopic expression of WUS. By contrast, fusion of an exogenous activation domain did not result in expanded floral meristems but induced flowers similar to those induced by the ectopic expression of AG. Our results demonstrate that WUS acts mainly as a repressor and that its function changes from that of a repressor to that of an activator in the case of regulation of the expression of AG.