Many transcription factors involved in the determination and maintenance of cell fates share DNA-binding motifs to form gene families. The most recently discovered evolutionarily conserved DNA-binding domain of 100 amino acids, termed the forkhead domain, emerged from a sequence comparison of the rat transcription factor HNF-3 alpha and the homeotic gene fork head of Drosophila. Here we describe the isolation of a new mouse forkhead gene named LUN. Of a total of five forkhead genes in the lung, the LUN gene was uniquely expressed in the bronchiolar epithelium and in type II pneumocytes. We found that the LUN protein has forkhead domain that is identical to the HFH8 gene and a C-terminal region that is very similar to the HFH8 gene. Based on the structural similarity of the two proteins, we investigated the structure-function relationship of the LUN protein in two kinds of promoters and found that regions C and D work differently as activation domains, namely that region C acts autonomously but region D cannot work without region C. These results suggest that the LUN gene may play an important role as a transactivator in the determination and maintenance of some types of cells in the lung.