Active transcriptional repression has been characterized as a function of many regulatory factors. It facilitates combinatorial regulation of gene expression by allowing repressors to be dominant over activators under certain conditions. Here, we show that the Engrailed protein uses two distinct mechanisms to repress transcription. One activity is predominant under normal transient transfection assay conditions in cultured cells. A second activity is predominant in an in vivo active repression assay. The domain mediating the in vivo activity (eh1) is highly conserved throughout several classes of homeoproteins and interacts specifically with the Groucho corepressor. While eh1 shows only weak activity in transient transfections, much stronger activity is seen in culture when an integrated target gene is used. In this assay, the relative activities of different repression domains closely parallel those seen in vivo, with eh1 showing the predominant activity. Reducing the amounts of repressor and target gene in a transient transfection assay also increases the sensitivity of the assay to the Groucho interaction domain, albeit to a lesser extent. This suggests that it utilizes rate-limiting components that are relatively low in abundance. Since Groucho itself is abundant in these cells, the results suggest that a limiting component is recruited effectively by the repressor-corepressor complex only on integrated target genes.Transcriptional repressors that can function at a distance, analogously to transcriptional activators, with separable DNA binding and effector domains, have been termed active repressors (18). Many higher eukaryotic transcription factors have been found to possess such activities (reviewed in references 13 and 23). One such protein that has been well-characterized both in cultured cells and in vivo is the product of the engrailed locus of Drosophila. The Engrailed protein (EN) contains a homeodomain (HD) related in DNA binding specificity to that of members of the Antennapedia class (3) but representing a separate, conserved class with two known members in both insects and mammals. Several members of the Antennapedia class have been shown to be transcriptional activators, including the fushi tarazu protein FTZ. FTZ is a strong, contextindependent activator in cultured cells (16, 37) and participates in a direct positive feedback on its own gene in Drosophila embryos (10,31,39). By swapping HDs between FTZ and EN, it was shown that EN domains can confer a dominant negative activity on the FTZ HD, counteracting endogenous FTZ protein to generate a ftz mutant phenotype in embryos (21). Indications that this repression is active, rather than simply a disruption of binding by factors that normally interact with ftz, include the dominant repression of the endogenous en gene, another FTZ target in vivo, even in regions in which FTZ is not expressed, and the loss of repression of the endogenous ftz gene upon deletion of a portion of EN from the chimeric repressor that is also required for active repressi...