Despite years of study, the precise mechanisms that control position-specific gene expression during development are not understood. Here, we analyze an enhancer element from the even skipped (eve) gene, which activates and positions two stripes of expression (stripes 3 and 7) in blastoderm stage Drosophila embryos. Previous genetic studies showed that the JAK-STAT pathway is required for full activation of the enhancer, whereas the gap genes hunchback (hb) and knirps (kni) are required for placement of the boundaries of both stripes. We show that the maternal zinc-finger protein Zelda (Zld) is absolutely required for activation, and present evidence that Zld binds to multiple non-canonical sites. We also use a combination of in vitro binding experiments and bioinformatics analysis to redefine the Kni-binding motif, and mutational analysis and in vivo tests to show that Kni and Hb are dedicated repressors that function by direct DNA binding. These experiments significantly extend our understanding of how the eve enhancer integrates positive and negative transcriptional activities to generate sharp boundaries in the early embryo.