The CCAAT displacement protein/Cut homeobox (CDP/Cux) transcription factor is expressed as multiple isoforms that may contain up to four DNA-binding domains: Cut repeats 1, 2, and 3 (CR1, CR2, CR3) and the Cut homeodomain (HD). The full-length protein, which contains all four DNA-binding domains, is surprisingly less efficient than the shorter isoforms in DNA binding. Using a panel of recombinant proteins expressed in mammalian or bacterial cells, we have identified a domain at the extreme N terminus of the protein that can inhibit DNA binding. This domain was able to inhibit the activity of full-length CDP/Cux and of proteins containing various combinations of DNA-binding domains: CR1CR2, CR3HD, or CR2CR3HD. Since inhibition of DNA binding was also observed with purified proteins obtained from bacteria, we conclude that autoinhibition does not require post-translational modification or interaction with an interacting protein but instead functions through an intramolecular mechanism. Antibodies directed against the N-terminal region were able to partially relieve inhibition. In vivo, the transition between the inactive and active states for DNA binding is likely to be governed by posttranslational modifications and/or interaction with one or more protein partners. In addition, we show that the relief of autoinhibition can be accomplished via the proteolytic processing of CDP/Cux. Altogether, these results reveal a novel mode of regulation that serves to modulate the DNA binding activity of CDP/Cux.