The control of DNA binding by eukaryotic transcription factors represents an important regulatory mechanism. Many transcription factors are controlled by cis-acting autoinhibitory modules that are thought to act by blocking promiscuous DNA binding in the absence of appropriate regulatory cues. Here, we have investigated the determinants and regulation of the autoinhibitory mechanism employed by the ETS-domain transcription factor, PEA3. DNA binding is inhibited by a module composed of a combination of two short motifs located on either side of the ETS DNA-binding domain. A second type of protein, Ids, can act in trans to mimic the effect of these cis-acting inhibitory motifs and reduce DNA binding by PEA3. By using a one-hybrid screen, we identified the basic helix-loop-helix-leucine zipper transcription factor USF-1 as an interaction partner for PEA3. PEA3 and USF-1 form DNA complexes in a cooperative manner. Moreover, the formation of ternary PEA3.USF-1.DNA complexes requires parts of the same motifs in PEA3 that form the autoinhibitory module. Thus the binding of USF-1 to PEA3 acts as a switch that modifies the autoinhibitory motifs in PEA3 to first relieve their inhibitory action, and second, promote ternary nucleoprotein complex assembly.