Hox genes control cell fates and specify regional identities in vertebrate development. Hox proteins show a relaxed DNA-binding selectivity in vitro, suggesting that functional specificity is achieved in vivo through the action of transcriptional co-factors. Pbx proteins are good candidates for such a role, on the basis of both genetic and biochemical evidence. We report that the human Pbx1 and HOXB1 proteins can cooperatively activate transcription through a genetically characterized Hox target, i.e. an autoregulatory element directing spatially restricted expression of the murine Hoxb-1 gene (b1-ARE) in the developing hindbrain. On the b1-ARE, only a restricted subset of HOX proteins (HOXA1, HOXB1, HOXA2) are able to bind cooperatively with Pbx1 and activate transcription. Selective recognition of the b1-ARE is mediated by the N-terminal region of the HOX homeodomain. The DNA-binding and protein-protein interaction functions of HOXB1 and Pbx1 are all necessary for the assembly of a transcriptionally active complex on the b1-ARE. Functional dissection of the complex allowed the localization of the main activation domain in the HOXB1 N-terminal region, and of an additional one in the C-terminal region of Pbx1 contained in the Pbx1a but not in the alternatively spliced Pbx1b isoform. Our results indicate that Pbx1 acts as a transcriptional co-factor of Hox proteins, allowing selective recognition and cooperative activation of regulatory target sequences.