The hepatitis B virus enhancer 1 element plays a fundamental role in the liver-specific regulation of hepatitis B virus gene expression. A central region of enhancer 1, the enhancer core domain, contains at least four cis-acting sequence motifs that are essential for enhancer 1 activity. In this study, we have investigated an essential motif within the core domain previously defined as footprint V (FPV). Transient transfection analyses demonstrate that FPV is capable of independently functioning in a liver-specific manner to activate transcription. Therefore, to further examine the liver-specific properties of FPV-mediated enhancer 1 activity, we have carried out the biochemical purification and characterization of FPV binding activity from rat liver nuclei. This study has conclusively identified hepatocyte nuclear factor 3beta (HNF-3beta), a liver-enriched member of the HNF-3/forkhead gene family, as the predominant purified protein that interacts with the FPV motif. Moreover, a cellular protein(s) that copurified with HNF-3beta specifically interacts with a novel sequence motif that partially overlaps FPV. Since this novel motif contains a palindromic sequence, we have tentatively referred to the protein(s) that binds to this site as palindrome-binding factor (PBF). Additional evidence indicates that HNF-3beta and PBF cooperatively interact with enhancer 1. Therefore, this study supports the hypothesis that FPV-mediated enhancer activity involves a cooperative interplay between HNF-3beta and at least one other enhancer 1-binding protein, PBF.