The Wilms' tumor susceptibility gene, wt1, encodes a transcription factor of the zinc finger protein family. Mutations in the WT1 gene product have been detected in both sporadic and familial Wilms' tumors, suggesting that alterations in WT1 may disrupt its normal function as a transcriptional regulator. The transcripts of wt1 are alternatively spliced; however, roles of the alternatively spliced forms have not been defined. The major transcript of wt1 encodes a WT1 protein [WT1(+KTS)+17AA] that contains three amino acids (+KTS) between the third and fourth zinc fingers and a serine-rich, 17 amino acid (+17AA) domain N-terminal to the zinc finger region. We now show that the WT1 (+KTS) forms functionally bind to a unique G+C-rich sequence within the PDGF A-chain promoter. We also show that WT1 (+KTS)+17AA functions as a strong transcriptional repressor and that +17AA alone fused to the zinc-finger domain of WT1 or to the heterologous DNA binding domain of GAL4 functions independently as a repressor. Deletion of four serine residues within +17AA abolishes the repressor activity of +17AA. These results indicate that wt1 products with +17AA contain an additional dominant repressor domain and that the presence or absence of +KTS determines alternative DNA binding specificity.