Using in silico analysis, we identified a potential target site for binding by ALX3 in the Foxo1 promoter located between nucleotides –826 to –809 relative to the transcription initiation site (Fig. 4E). Therefore, we investigated whether ALX3 regulates the expression of Foxo1 directly. Direct binding of ALX3 to the target Foxo1 promoter site was confirmed by electrophoretic mobility shift assays using nuclear extracts from primary MEM cells from wild type embryos. Sequence specificity of DNA–protein complexes was determined by competition with unlabelled oligonucleotides added in excess to the binding reaction, and the presence of ALX3 in these complexes was confirmed by the addition of an ALX3 antibody (Fig. 4F). Using transfections of a luciferase reporter under the control of the Foxo1 promoter in Hela or in primary MEM cells from Alx3-null embryos, we found that overexpression of Alx3 resulted in increased luciferase activity only when the target site in the Foxo1 promoter was present (Fig. 4G and H), thus supporting the notion that ALX3 transactivates the Foxo1 promoter by binding specifically to this site.