Understanding how diverse transcription patterns are achieved through common factor binding elements is a fundamental question that underlies much of developmental and cellular biology. One example is provided by the fibroblast growth factor 4 (FGF-4) gene, whose expression is restricted to specific embryonic tissues during development and to undifferentiated embryonal carcinoma cells in tissue culture. Analysis of the cis- and trans-acting elements required for the activity of the previously identified FGF-4 enhancer in F9 embryonal carcinoma cells showed that enhancer function depends on sequences that bind Sp1 and ubiquitous as well as F9-specific octamer-binding proteins. However, sequences immediately upstream of the octamer motif, which conform to a binding site for the high-mobility group (HMG) domain factor family, were also critical to enhancer function. We have identified a novel F9-specific factor, Fx, which specifically recognizes this motif. Fx formed complexes with either Oct-1 or Oct-3 in a template-dependent manner. The ability of different enhancer variants to form the Oct-Fx complexes correlated with enhancer activity, indicating that these complexes play an essential role in transcriptional activation of the FGF-4 gene. Thus, while FGF-4 enhancer function is octamer site dependent, its developmentally restricted activity is determined by the interaction of octamer-binding proteins with the tissue-specific factor Fx.