In this study, we describe the characterization of a gene encoding a novel Krüppel-like protein, named Glis2. Glis2 encodes a relatively proline-rich, basic, 55.8 kD protein. Its five tandem Cys2-His2 zinc-finger motifs exhibit highest homology to those of members of the Gli and Zic subfamilies of Krüppel-like proteins. Confocal microscopic analysis demonstrated that Glis2 localizes to the nucleus. Analysis of the genomic structure of the Glis2 gene showed that it is composed of 6 exons separated by 5 introns spanning a genomic region of more than 7.5 kb. Fluorescence in situ hybridization mapped the mouse Glis2 gene to chromosome 16A3-B1. Northern blot analysis showed that the Glis2 gene encodes a 3.8 kb transcript that is most abundant in adult mouse kidney. By in situ hybridization, expression was localized to somites and neural tube, and during metanephric development predominantly to the ureteric bud, precursor of the collecting duct and inductor of nephronic tubule formation. One-hybrid analysis using Glis2 deletion mutants identified a novel activation function (AF) at the N-terminus. The activation of transcription through this AF domain was totally suppressed by two repressor functions just downstream from the AF. One of the repressor functions is contained within the first zinc-finger motif. The level of transcriptional activation and repression varied with the cell line tested and may be in part due to cell type-specific expression of co-activators and co-repressors. Our results suggest that Glis2 behaves as a bifunctional transcriptional regulator. Both the activation and repressor functions may play an important role in the regulation of gene expression during embryonic development.