LMO (LIM-only) and LIM-HD (LIM-homeodomain) proteins form a family of proteins that is required for myriad developmental processes and which can contribute to diseases such as T-cell leukaemia and breast cancer. The four LMO and 12 LIM-HD proteins in mammals are expressed in a combinatorial manner in many cell types, forming a transcriptional 'LIM code'. The proteins all contain a pair of closely spaced LIM domains near their N-termini that mediate protein-protein interactions, including binding to the approximately 30-residue LID (LIM interaction domain) of the essential co-factor protein Ldb1 (LIM domain-binding protein 1). In an attempt to understand the molecular mechanisms behind the LIM code, we have determined the molecular basis of binding of LMO and LIM-HD proteins for Ldb1(LID) through a series of structural, mutagenic and biophysical studies. These studies provide an explanation for why Ldb1 binds the LIM domains of the LMO/LIM-HD family, but not LIM domains from other proteins. The LMO/LIM-HD family exhibit a range of affinities for Ldb1, which influences the formation of specific functional complexes within cells. We have also identified an additional LIM interaction domain in one of the LIM-HD proteins, Isl1. Despite low sequence similarity to Ldb1(LID), this domain binds another LIM-HD protein, Lhx3, in an identical manner to Ldb1(LID). Through our and other studies, it is emerging that the multiple layers of competitive binding involving LMO and LIM-HD proteins and their partner proteins contribute significantly to cell fate specification and development.