We have examined the role that the caudal-related homeobox transcription factors, Cdx1 and Cdx2, play in activating the enterocyte differentiation marker gene, intestinal alkaline phosphatase (IAP). Human colon cancer Caco-2 cells were transiently transfected with Cdx1 and/or Cdx2, and semi-quantitative RT-PCR was used to study the effects on IAP mRNA expression. Transfections with a variety of IAP-luciferase reporter constructs were used to identify a Cdx response element located within the human IAP gene promoter. Protein-DNA interactions were examined by EMSA. The results showed that Cdx1 markedly induced IAP mRNA expression whereas Cdx2 did not, and in fact inhibited the Cdx1 effects. Functional analysis revealed that Cdx1 transactivates (4-fold, p<0.05) the IAP promoter through a novel Cdx response element (GTTTAGA) located between -2369 and - 2375 upstream of the translational start site. EMSA showed that both Cdx1 and Cdx2 could bind to the cis-element, but in co-transfection experiments Cdx2 inhibited the Cdx1 effects by approximately 50%. Thus, we have identified a previously unrecognized interaction between two important gut transcription factors, Cdx1 and Cdx2, in the context of IAP gene regulation. Cdx1 activates the IAP gene via a novel cis element, whereas Cdx2 inhibits the Cdx1 effects.