Krueppel-like factor 4 (Klf4) belongs to the Sp/Klf family of zinc-finger transcription factors and is indispensable for terminal maturation of epithelial tissues. Furthermore, it is part of a small set of proteins that are used to generate pluripotent embryonic stem cells from differentiated tissues. Herein, we describe that a Klf4 zinc-finger domain mutant induces self-renewal and block of maturation, while wild-type Klf4 induces terminal macrophage differentiation. Moreover, we present the crystal structure of the zinc-finger domain of Klf4 bound to its target DNA, revealing that primarily the two C-terminal zinc-finger motifs are required for site specificity. Lack of those two zinc fingers leads to deficiency of Klf4 to induce macrophage differentiation. The first zinc finger, on the other hand, inhibits the otherwise cryptic self-renewal and block of differentiation activity of Klf4. Our data show that impairing the DNA binding could potentially contribute to a monocytic leukemia.