Expression of the avian apoVLDLII gene is liver specific and completely dependent on estrogen. Previous analyses of protein binding sites in the apoVLDLII promoter revealed interactions between liver-enriched and ubiquitous factors at a location, site F', between nucleotides -229 and -260 relative to the major transcriptional start site. Site-directed mutagenesis of G residues contacted by these factors decreased expression from the promoter approximately 5-fold in the avian hepatoma cell line LMH2A. We have used this site to screen a cDNA expression library constructed from day 9 embryonic liver RNA. One of the two DNA binding factors isolated is a novel homeodomain protein. With the exception of the homeodomain itself, which is atypically located close to the protein N-terminus, the factor displays little similarity to any known DNA binding protein. Its homeodomain is most similar to that of the maize protein Knotted-1, while the most closely related vertebrate domain is that of the human proto-oncoprotein Pbx1. We demonstrate that the DNA binding specificity of the factor is consistent with its involvement in the ubiquitous complex formed with site F' and that it is capable of suppressing expression from the apoVLDLII promoter in short-term transfection experiments. These studies, combined with its DNA binding specificity, the tissue distribution of its mRNA and its developmental regulation, suggest a role as a negative regulator of gene expression in non-hepatic tissues and in the liver early during embryogenesis.