PAX6 is a transcription factor with two DNA-binding domains (paired box and homeobox) and a proline-serine-threonine (PST)-rich transactivation domain. PAX6 regulates eye development in animals ranging from jellyfish to Drosophila to humans. Heterozygous mutations in the human PAX6 gene result in various phenotypes, including aniridia, Peter's anomaly, autosomal dominant keratitis, and familial foveal dysplasia. It is believed that the mutated allele of PAX6 produces an inactive protein and aniridia is caused due to genetic haploinsufficiency. However, several truncation mutations have been found to occur in the C-terminal half of PAX6 in patients with Aniridia resulting in mutant proteins that retain the DNA-binding domains but have lost most of the transactivation domain. It is not clear whether such mutants really behave as loss-of-function mutants as predicted by haploinsufficiency. Contrary to this theory, our data showed that these mutants are dominant-negative in transient transfection assays when they are coexpressed with wild-type PAX6. We found that the dominant-negative effects result from the enhanced DNA binding ability of these mutants. Kinetic studies of binding and dissociation revealed that various truncation mutants have 3-5-fold higher affinity to various DNA-binding sites when compared with the wild-type PAX6. These results provide a new insight into the role of mutant PAX6 in causing aniridia.PAX6 is an evolutionarily conserved gene that regulates the development of the eye in animals ranging from jellyfish to Drosophila to humans (for review, see Ref. 1). The induction of ectopic compound eyes by overexpressing mouse and squid Pax6 (2, 3) clearly indicates that not only is the structure of PAX6 conserved but also its biochemical properties are conserved. Recent reports have shown that PAX6 is also involved in pancreas development (4, 5).Like other members of the PAX family, PAX6 functions as a transcriptional activator. Structural analysis of PAX6 has identified two DNA-binding domains (a paired domain at the N terminus and a paired like homeodomain in the middle), a glycine-rich hinge region that links the two DNA-binding domains, and a proline-serine-threonine-rich (PST) transactivation domain at the C terminus. Our recent studies designed to characterize the transactivation domain revealed that the four exons, which constitute the PST domain, synergistically stimulate transcriptional activation and that the transactivation potential is not localized but distributed throughout the PST domain (6). The transcription factors of the PAX family recognize their target genes via the DNA binding function of the paired domain (7,8). Several PAX6 paired-domain binding sequences have already been identified (reviewed in Ref. 1). However, studies of Czerny and Busslinger (9) identifying the P3 site as the optional binding site for cooperative binding and transactivation by the PAX6 homeodomain, conservation of P3 in eye-specific promoters (10), and the presence and requirement of the P3 site in the r...