Formation of male-specific structures and regression of female primordia are regulated in early male embryogenesis by SRY, a single-copy gene on the Y chromosome. Assignment of SRY as the testis-determining factor in eutherian mammals is supported by molecular analysis of cytogenetic sex reversal (i.e., XX males and XY females) and by complementary studies of transgenic murine models. Here we characterize the putative DNA-binding domain of SRY, which contains a conserved sequence motif shared by high-mobility group nuclear proteins and a newly recognized class of transcription factors. The SRY DNA-binding domain specifically recognizes with nanomolar affinity proximal upstream elements (designated SRYe) in the promoters of the sex-specific genes encoding P450 aromatase and Mullerian inhibiting substance (MIS). P450 aromatase catalyzes the conversion of testosterone to estradiol, and in the male embryo its expression is down-regulated. Conversely, MIS is expressed in the male embryo to induce testicular differentiation and regression of female reproductive ducts. SRYe-binding activity is observed in nuclear extracts obtained from embryonic urogenital ridge immediately preceding morphologic testicular differentiation. Our results support the hypothesis that SRY directly controls male development through sequence-specific regulation of target genes.