Members of the Twist subfamily of basic helix-loophelix transcription factors are important for the specification of mesodermal derivatives during vertebrate embryogenesis. This subfamily includes both transcriptional activators such as scleraxis, Hand2, and Dermo-1 and repressors such as Twist and Hand1. Paraxis is a member of this subfamily, and it has been shown to regulate morphogenetic events during somitogenesis, including the transition of cells from mesenchyme to epithelium and maintaining anterior/posterior polarity. Mice deficient in paraxis exhibit a caudal truncation of the axial skeleton and fusion of the vertebrae. Considering the developmental importance of paraxis, it is important for future studies to understand the molecular basis of its activity. Here we demonstrate that paraxis can function as a transcriptional activator when it forms a heterodimer with E12. Paraxis is able to bind to a set of E-boxes that overlaps with the closely related scleraxis. Paraxis expression precedes that of scleraxis in the region of the somite fated to form the axial skeleton and tendons and is able to direct transcription from an E-box found in the scleraxis promoter. Further, in the absence of paraxis, Pax-1 is no longer expressed in the somites and presomitic mesoderm. These results suggest that paraxis may regulate early events during chondrogenesis by positively directing transcription of sclerotome-specific genes.The basic helix-loop-helix (bHLH) 1 superfamily of transcription factors regulates a wide array of developmental processes, including neurogenesis, myogenesis, cardiogenesis, hematopoiesis, and gametogenesis (1-8). The bHLH transcription factors belong to a larger superfamily of helix-loop-helix transcription factors that contains more than 240 proteins that are expressed in eukaryotic organisms that range from yeast to humans (9). Members of this family possess a highly conserved functional domain containing a stretch of basic amino acids adjacent to two amphipathic ␣-helices separated by a loop (10). The helices mediate dimerization with a second bHLH factor, bringing the basic domains into close proximity and forming the bipartite DNA binding domain. The bHLH dimers bind specifically to a hexanucleotide sequence (CANNTG), known as an E-box (11). E-boxes are found in the control regions of many lineage-specific genes. In some cases, such as the muscle-specific genes myogenin, myosin light chain, and muscle creatine kinase, the E-box is required for full transcription of the gene (12-16).The bHLH proteins can be divided into two classes based on tissue distribution and dimerization capabilities. Class A bHLH factors are known as E proteins and include the E2A gene products E12 and E47, HEB, and the Drosophila daughterless gene product (17, 18). These genes are broadly expressed and able to form homo-and heterodimers. Class B bHLH factors exhibit tissue-restricted expression patterns (19,20). Within this class are both transcriptional activators, such as MyoD and MashI, and transcriptional represso...