Forkhead-related activator 2 (FREAC-2) is a human transcription factor expressed in lung and placenta that binds to cis-elements in several lung-specific genes. We have identified the parts of FREAC-2 responsible for trans-activation and found two functionally redundant activation domains on the C-terminal side of the DNA binding forkhead domain. Activation domain 1 consists of the most C-terminal 23 amino acids of FREAC-2 and contains a sequence motif conserved in an activation domain of another forkhead protein, FREAC-1. Activation domain 2 is built up by three synergistic subdomains in the central part of the FREAC-2 protein. FREAC-2 was shown to interact in vitro with TBP and TFIIB. The target site for FREAC-2 on TBP was localized to the N-terminal repeat in the core domain of TBP. TFIIB binds FREAC-2 close to the cleft between its two globular domains. The part of FREAC-2 that binds TBP was mapped to 21 amino acids in the C-terminal end of the forkhead domain. This sequence is well conserved among forkhead proteins, raising the possibility that interaction with TBP may be a general characteristic of this family of transcription factors. Overexpression of TFIIB potentiates activation by FREAC-2 in a manner dependent on the FREAC-2 activation domains. Nuclear localization of FREAC-2 was found to depend on sequences from both ends of the forkhead domain.