Abstract Runx proteins are bifunctional transcription factors that both repress and activate transcription in animal cells. Typically, Runx proteins work in concert with other transcriptional regulators, including co-activators and co-repressors to mediate their biological effects. In Drosophila melanogaster the archetypal Runx protein, Runt, functions in numerous processes including segmentation, neurogenesis and sex determination. During primary sex determination Runt acts as one of four X-linked signal element (XSE) proteins that direct female-specific activation of the establishment promoter (Pe) of the master regulatory gene Sex-lethal (Sxl). Successful activation of SxlPe requires that the XSE proteins overcome the repressive effects of maternally deposited Groucho (Gro), a potent co-repressor of the Gro/TLE family. Runx proteins, including Runt, contain a C-terminal peptide, VWRPY, known to bind to Gro/TLE proteins to mediate transcriptional repression. We show that Runt’s VWRPY co-repressor-interaction domain is needed for Runt to activate SxlPe. Deletion of the Gro-interaction domain eliminates Runt-ability to activate SxlPe, whereas replacement with a higher affinity, VWRPW, sequence promotes Runt-mediated transcription. This suggests that Runt may activate SxlPe by antagonizing Gro function, a conclusion consistent with earlier findings that Runt is needed for Sxl expression only in embryonic regions with high Gro activity. Surprisingly we found that Runt is not required for the initial activation of SxlPe. Instead, Runt is needed to keep SxlPe active during the subsequent period of high-level Sxl transcription suggesting that Runt helps amplify the difference between female and male XSE signals by counter-repressing Gro in female, but not in male, embryos.