The anticancer drug, distamycin A, alters DNA conformation by binding to A/T-rich domains. We propose that binding of the drug to DNA alters transcription factor interactions and that this may alter genetic regulation. We have analyzed the effects of distamycin A upon expression of the muscle-specific cardiac and skeletal alpha-actin genes which have A/T-rich regulatory elements in their promoters. Distamycin A specifically inhibited endogenous muscle genes in the myogenic C2 cell line and effectively eliminated the myogenic program. Conversely, when 10T1/2C18 derived pleuripotential TA1 cells were induced to differentiate in the presence of distamycin A, adipocyte differentiation was enhanced whereas the numbers of cells committing to the myogenic program decreased dramatically. Using the mobility shift assay distamycin A selectively inhibited binding of two important transcription factors, SRF and MEF2, to their respective A/T-rich elements. The binding of factors Sp1 and MyoD were not affected. The inhibition of factor binding correlated with a repression of muscle-specific promoter activity as assayed by transient transfection assays. Co-expression of the myoD gene, driven by a distamycin A-insensitive promoter, failed to relieve the inhibition of these muscle-specific promoters by distamycin A. Additionally, SRF and MEF2 dependent promoters were selectively down regulated by distamycin A. These results suggest that distamycin A may inhibit muscle-specific gene expression by selectively interfering with transcription factor interactions and demonstrate the importance of these A/T-rich elements in regulating differentiation of this specific cell type.