Strains of the filamentous fungus Cochliobolus carbonum that produce the host-selective compound HC-toxin, a cyclic tetrapeptide, are highly virulent on certain genotypes of maize (Zea mays L.). Production of HC-toxin is under the control of a complex locus, TOX2, which is composed of at least seven linked and duplicated genes that are present only in toxin-producing strains of C. carbonum. One of these genes, TOXE, was earlier shown to be required for the expression of the other TOX2 genes. TOXE has four ankyrin repeats and a basic region similar to those found in basic leucine zipper (bZIP) proteins, but lacks any apparent leucine zipper. Here we show that TOXE is a DNA-binding protein that recognizes a ten-base motif (the "tox-box") without dyad symmetry that is present in the promoters of all of the known TOX2 genes. Both the basic region and the ankyrin repeats are involved in DNA binding. A region of TOXE that includes the first ankyrin repeat is necessary and sufficient for transcriptional activation in yeast. The data indicate that TOXE is the prototype of a new family of transcription factor, so far found only in plant-pathogenic fungi. TOXE plays a specific regulatory role in HC-toxin production and, therefore, pathogenicity by C. carbonum.