Maternally contributed mRNAs and proteins control the initial stages of development following fertilization. During this time, most of the zygotic genome remains transcriptionally silent. The initiation of widespread zygotic transcription is coordinated with the degradation of maternally provided mRNAs at the maternal-to-zygotic transition (MZT). While most of the genome is silenced prior to the MZT, a small subset of zygotic genes essential for the future development of the organism is transcribed. Previous work in our laboratory and others identified the TAGteam element, a set of related heptameric DNA-sequences in the promoters of many early-expressed Drosophila genes required to drive their unusually early transcription. To understand how this unique subset of genes is regulated, we identified a TAGteam-binding factor Grainyhead (Grh). We demonstrated that Grh and the previously characterized transcriptional activator Zelda (Zld) bind to different TAGteam sequences with varying affinities, and that Grh competes with Zld for TAGteam occupancy. Moreover, overexpression of Grh in the early embryo causes defects in cell division, phenocopying Zld depletion. Our findings indicate that during early embryonic development the precise timing of gene expression is regulated by both the sequence of the TAGteam elements in the promoter and the relative levels of the transcription factors Grh and Zld.