The structurally related POU homeo domain proteins Pit-1 and Oct-2 activate pituitary- and lymphoid-specific transcription, respectively, by binding to similar AT-rich motifs in their target genes. In this study we identify bases critical for recognition and activation by Pit-1 and examine how small differences in Pit-1 and Oct-2-binding sites can impart differential transcriptional responses in pituitary and B-lymphoid cells. Scanning mutagenesis of Pit-1 response elements in both the rat prolactin and growth hormone genes reveals a critical binding motif recognized in an identical manner by the native Pit-1 protein and cloned Pit-1 gene product. This motif, ATTATTCCAT, differs by only two bases from the octamer element, ATTTGCAT, required for Oct-2-dependent activation of immunoglobulin genes. Cross recognition of Pit-1 and Oct-2 sites by both factors can be demonstrated in competitive binding assays, in which an oligometric Pit-1 site from the prolactin gene is converted to an Oct-2 site by a double point mutation. In contrast to the binding data, no cross activation of transcription is detectable in cultured cell lines. When inserted immediately 5' to a prolactin TATA box, the wild-type prolactin element enhances transcription strongly in pituitary cells but is inactive in B cells, whereas the octamer variant of the prolactin site activates expression in B cells but is silent in pituitary lines. Both elements are nonfunctional in heterologous cell lines that lack Pit-1 and Oct-2.(ABSTRACT TRUNCATED AT 250 WORDS)