We describe experiments to compare the activities of two Drosophila homeodomain proteins, Bicoid (Bcd) and an altered-specificity mutant of Fushi tarazu, Ftz(Q50K). Although the homeodomains of these proteins share a virtually indistinguishable ability to recognize a consensus Bcd site, only Bcd can activate transcription from natural enhancer elements when assayed in both yeast and Drosophila Schneider S2 cells. Our analysis of chimeric proteins suggests that both the homeodomain of Bcd and sequences outside the homeodomain contribute to its ability to recognize natural enhancer elements. We further show that, unlike the Bcd homeodomain, the Ftz(Q50K) homeodomain fails to recognize nonconsensus sites found in natural enhancer elements. The defect of a chimeric protein containing the homeodomain of Ftz(Q50K) in place of that of Bcd can be preferentially restored by converting the nonconsensus sites in natural enhancer elements to consensus sites. Our experiments suggest that the biological specificity of Bcd is determined by combinatorial contributions of two important mechanisms: the nonconsensus site recognition function conferred by the homeodomain and the cooperativity function conferred primarily by sequences outside the homeodomain. A systematic comparison of different assay methods and enhancer elements further suggests a fluid nature of the requirements for these two Bcd functions in target selection.