We characterize a 37-bp element (fkh[250]) derived from the fork head (fkh) gene, a natural target of the Hox gene Sex combs reduced (Scr). In vitro, Scr cooperatively binds to this DNA with the Hox cofactor Extradenticle (Exd), and the activation of this enhancer in vivo requires Scr and exd. Other Hox/Exd heterodimers do not activate this element in vivo and do not bind this element with high affinity in vitro. The amino-terminal arm of the Scr homeodomain is crucial for the specific activation of this element in vivo. By mutating two base pairs within this element, we can convert the Scr/Exd-binding site to a Hox/Exd consensus site that binds several different Hox/Exd heterodimers. This element, fkh[250(con)], is activated by Scr, Antennapedia (Antp), and Ultrabithorax (Ubx) but repressed by abdominal-A (abd-A). We also show that Scr and Exd are only able to activate the fkh[250] element during the early stages of embryogenesis because, by stage 11, Scr negatively regulates the gene homothorax (hth), which is required for the nuclear localization of Exd. These results suggest that Exd is a specificity cofactor for the trunk Hox genes, and that the control of Exd subcellular localization is a mechanism to regulate Hox activity during development.