Normal endocrine development and function require nuclear hormone receptor SF-1 (steroidogenic factor 1). To understand the molecular mechanism of SF-1 action, we have investigated its domain function by mutagenesis and functional analyses. Our mutant studies show that the putative AF2 (activation function 2) helix located at the C-terminal end is indispensable for gene activation. SF-1 does not have an N-terminal AF1 domain. Instead, it contains a unique FP region, composed of the Ftz-F1 box and the proline cluster, after the zinc finger motif. The FP region interacts with transcription factor IIB (TFIIB) in vitro. This interaction requires residues 178-201 of TFIIB, a domain capable of binding several transcription factors. The FP region also mediates physical interaction with c-Jun, and this interaction greatly enhances SF-1 activity. The putative SF-1 ligand, 25-hydroxycholesterol, has no effects on these bindings. In addition, the Ftz-F1 box contains a bipartite nuclear localization signal (NLS). Removing the basic residues at either end of the key nuclear localization sequence NLS2.2 abolishes the nuclear transport. Expression of mutants containing only the FP region or lacking the AF2 domain blocks wild-type SF-1 activity in cells. By contrast, the mutant having a truncated nuclear localization signal lacks this dominant negative effect. These results delineate the importance of the FP and AF2 regions in nuclear localization, protein-protein interaction, and transcriptional activation.