We describe the identification of an enhancer sequence and a sequence-specific DNA-binding protein required for developmental expression of the Xenopus laevis GS17 gene. Using microinjection of recombinant plasmids into fertilized frog eggs, we have shown that a 14 base pair CT-rich sequence element, normally located about 700 bases upstream of the GS17 promoter, is sufficient to activate transcription of a heterologous reporter gene in gastrula stage embryos. This regulatory element has been called the OZ sequence. Sequences closely related to OZ are located in the promoter regions of several other genes expressed during Xenopus development. Extracts prepared from Xenopus embryos show the presence of a DNA-binding factor, OZ-1, that specifically recognizes the OZ sequence. Mutations within the OZ element that abolish OZ-1 binding also abolish enhancer activity. The OZ-1 factor contains at least two proteins of approximate M(r) 76 x 10(3) and 100 x 10(3). The sequence-specific binding activity accumulates during oogenesis and remains present at approximately constant levels throughout early development.