Active Hobo/Activator/Tam3 (hAT) transposable elements are rarely found in vertebrates. Previously, goldfish Tgf2 was found to be an autonomously active vertebrate transposon that is efficient at gene-transfer in teleost fish. However, little is known about Tgf2 functional domains required for transposition. To explore this, we first predicted in silico a zinc finger domain in the N-terminus of full length Tgf2 transposase (L-Tgf2TPase). Two truncated recombinant Tgf2 transposases with deletions in the N-terminal zinc finger domain, S1- and S2-Tgf2TPase, were expressed in bacteria from goldfish cDNAs. Both truncated Tgf2TPases lost their DNA-binding ability in vitro, specifically at the ends of Tgf2 transposon than native L-Tgf2TPase. Consequently, S1- and S2-Tgf2TPases mediated gene transfer in the zebrafish genome in vivo at a significantly (p < 0.01) lower efficiency (21%-25%), in comparison with L-Tgf2TPase (56% efficiency). Compared to L-Tgf2TPase, truncated Tgf2TPases catalyzed imprecise excisions with partial deletion of TE ends and/or plasmid backbone insertion/deletion. The gene integration into the zebrafish genome mediated by truncated Tgf2TPases was imperfect, creating incomplete 8-bp target site duplications at the insertion sites. These results indicate that the zinc finger domain in Tgf2 transposase is involved in binding to Tgf2 terminal sequences, and loss of those domains has effects on TE transposition.