Recently, a pituitary-specific enhancer was identified within the 5' flanking region of the mouse glycoprotein hormone alpha-subunit gene. This enhancer is active in pituitary cells of the gonadotrope and thyrotrope lineages and has been designated the pituitary glycoprotein hormone basal element (PGBE). In the present studies, we sought to isolate and characterize proteins which interact with the PGBE. Mutagenesis experiments identified a 14-bp imperfect palindrome that is required for binding of a factor which is present in cells of gonadotrope and thyrotrope lineages but not in other cells. Screening of a mouse cDNA library with a DNA probe containing the imperfect palindrome resulted in the isolation of a LIM-homeodomain transcription factor. The cDNA predicts a mouse protein which is 94% identical to the recently described rat LIM-homeodomain protein LH-2. LH-2 contains two zinc fingers (LIM domain) and a consensus homeodomain. Hybridization analysis revealed relatively high expression of LH-2 mRNA in the central nervous system and in pituitary cells of the gonadotrope and thyrotrope lineages. Lower or nondetectable levels of LH-2 mRNA were found in other pituitary cells and tissues, including placental cells. Recombinant LH-2 homeodomain was found to selectively bind to the previously identified imperfect palindrome in the PGBE. Point mutations in the PGBE resulted in parallel losses in the binding of a nuclear factor from a cell line of the gonadotrope lineage and recombinant LH-2-binding activity. Use of an antibody to LH-2 provided evidence that endogenous PGBE-binding activity from cells of the gonadotrope lineage involves a protein which is immunologically related to LH-2. Expression of LH-2 in two heterologous cell types resulted in activation of a reporter gene containing the mouse alpha promoter. These data suggest that the LIM-homeodomain factor LH-2 plays a role in stimulating tissue-specific expression of the mouse glycoprotein hormone alpha subunit. The finding that a LIM-homeodomain protein can stimulate expression of one of the earliest markers of pituitary differentiation raises the possibility that this factor plays a role in cell lineage determination in the pituitary.