Pax-5, a member of the paired domain family of transcription factors, is a key regulator of B lymphocyte-specific transcription and differentiation. A major target of Pax-5-mediated activation is the mb-1 gene, which encodes the essential transmembrane signaling protein Ig-alpha. Pax-5 recruits three members of the Ets family of transcription factors: Ets-1, Fli-1 and GABPalpha (with GABPbeta1), to assemble ternary complexes on the mb-1 promoter in vitro. Using the Pax-5:Ets-1:DNA crystal structure as a guide, we defined amino acid requirements for transcriptional activation of endogenous mb-1 genes using a novel cell-based assay. Mutations in the beta-hairpin/beta-turn of the DNA-binding domain of Pax-5 demonstrated its importance for DNA sequence recognition and activation of mb-1 transcription. Mutations of amino acids contacting Ets-1 in the crystal structure reduced or blocked mb-1 promoter activation. One of these mutations, Q22A, resulted in greatly reduced mb-1 gene transcript levels, concurrent with the loss of its ability to recruit Fli-1 to bind the promoter in vitro. In contrast, the mutation had no effect on recruitment of the related Ets protein GABPalpha (with GABPbeta1). These data further define requirements for Pax-5 function in vivo and reveal the complexity of interactions required for cooperative partnerships between transcription factors.