The transcription factors Dorsal and Twist regulate dorsoventral axis formation during Drosophila embryogenesis. Dorsal and Twist bind to closely linked DNA elements in a number of promoters and synergistically activate transcription. We have identified a novel protein named Dorsal-interacting protein 3 (Dip3) that may play a role in this synergy. Dip3 functions as a coactivator to stimulate synergistic activation by Dorsal and Twist, but does not stimulate simple activation of promoters containing only Dorsal or only Twist binding sites. In addition, Dip3 is able to bind DNA in a sequence specific manner and activate transcription directly. Dip3 possesses an N-terminal MADF domain and a C-terminal BESS domain, an architecture that is conserved in at least 14 Drosophila proteins, including Adf-1 and Stonewall. The MADF domain directs sequence specific DNA binding to a site consisting of multiple trinucleotide repeats, while the BESS domain directs a variety of protein-protein interactions, including interactions with itself, with Dorsal, and with a TBP-associated factor. We assess the possibility that the MADF and BESS domains are related to the SANT domain, a well-characterized motif found in many transcriptional regulators and coregulators.