Uracil in DNA is usually considered to be an error, but it may be used for signaling in Drosophila development via recognition by a novel uracil-DNA-degrading factor (UDE) [(Bekesi A et al. (2007) Biochem Biophys Res Commun 355, 643-648]. The UDE protein has no detectable similarity to any other uracil-DNA-binding factors, and has no structurally or functionally described homologs. Here, a combination of theoretical and experimental analyses reveals the domain organization and DNA-binding pattern of UDE. Sequence alignments and limited proteolysis with different proteases show extensive protection by DNA at the N-terminal duplicated conserved motif 1A/1B segment, and a well-folded domain within the C-terminal half encompassing conserved motifs 2-4. Theoretical structure prediction suggests that motifs 1A and 1B fold as similar alpha-helical bundles, and reveals two conserved positively charged surface patches that may bind DNA. CD spectroscopy also supports the presence of alpha-helices in UDE. Full functionality of a physiologically occurring truncated isoform in Tribolium castaneum lacking one copy of the N-terminal conserved motif 1 is revealed by activity assays of a representative truncated construct of Drosophila melanogaster UDE. Gel filtration and analytical ultracentrifugation results, together with analysis of predicted structural models, suggest a possible dimerization mechanism for preserving functionality of the truncated isoform.