CCAAT-binding factors A (CBF-A) and B (CBF-B) are two subunits of the heteromeric CCAAT-binding factor. Portions of CBF-A and CBF-B have a high degree of amino acid sequence identity to segments of the HAP3 and HAP2 subunits of a yeast multimeric transcription factor. We show here that the subunits of CBF interact with each other in the absence of DNA binding. This interaction was revealed by cross-linking and coimmunoprecipitation studies. Both the DNA binding and subunit interaction functions of CBF-B have been examined by mutational analysis. A segment of 83 amino acids from residues 252 to 334, which corresponds to the evolutionarily conserved portion of CBF-B, is necessary and sufficient for CBF-A-dependent DNA binding. Carboxyl-terminal deletions of this segment (or mutations in arginine residues in this carboxyl-terminal part) abolish DNA binding, but do not alter subunit interactions between CBF-A and CBF-B. Mutations in hydrophobic amino acids within the amino-terminal part of the evolutionarily conserved sequence at positions 252-334 result in loss of both DNA binding and subunit interaction activities. Our results indicate that the evolutionarily conserved segment of CBF-B contains both DNA-binding and subunit interaction domains and that the integrity of both domains is essential for DNA binding.