Mutations in the whn gene are associated with the phenotype of congenital athymia and hairlessness in mouse and rat. The whn gene encodes a presumptive transcription factor with a DNA binding domain of the forkhead/ winged-helix class. Two previously described null alleles encode truncated whn proteins lacking the characteristic DNA binding domain. In the rat rnu allele described here, a nonsense mutation in exon 8 of the whn gene was identified. The truncated whnrnu protein contains the DNA binding domain but lacks the 175 C-terminal amino acids of the wild-type protein. To facilitate the identification of functionally important regions in this region, a whn homolog from the pufferfish Fugu rubripes was isolated. Comparison of derived protein sequences with the mouse whn gene revealed the presence of a conserved acidic protein domain in the C terminus, in addition to the highly conserved DNA binding domain. Using fusions with a heterologous DNA binding domain, a strong transcriptional activation domain was localized to the C-terminal cluster of acidic amino acids. As the whnrnu mutant protein lacks this domain, our results indicate that a transactivation function is essential for the activity of the whn transcription factor.