Drosophila hairy (h) plays a crucial role in early development as a pair-rule segmentation gene. h and its structurally related gene Enhancer of split [E(spl)] are also required for normal sensory neurogenesis in late development. To analyze the molecular mechanisms of mammalian development, we recently characterized three rat helix-loop-helix (HLH) factors that show structural homology to the Drosophila h and E(spl) gene products, and found that rat factors exhibit distinct spatiotemporal expression patterns and act as a negative regulator. Here, we report the molecular characterization of another member of this family, designated HES-2. Rat HES-2 protein has a basic HLH domain homologous to h and E(spl) as well as the carboxy-terminal Trp-Arg-Pro-Trp sequence conserved among this family. The HES-2 mRNA is present as early as embryonic day 9.5 and is detected in a variety of tissues of both embryos and adults. DNase-I-footprinting analyses indicate that HES-2 binds to all E box sequences (CANNTG) we tested as well as to the N-box sequences (CACNAG). Further studies of gel-mobility-shift assays show that HES-2 has a higher affinity for the E box than for the N box. Transient transfection analyses suggest that HES-2 decreases the transcription originating from the promoters containing either the E box or the N box. These results indicate that HES-2 acts as a negative regulator through interaction with both E-box and N-box sequences.