The tissue-specific transcription factors LFB1 (HNF1) and LFB3 (vHNF1) mainly expressed in liver, kidney and intestine are homeoproteins that interact with the regulatory element HP1. The HP1 sequence constitutes one of the most important cis-acting elements in liver-specifically expressed genes, while its function in other cell types containing LFB1 and LFB3 is not fully understood. In mammals, LFB1 activity is modulated by DCoH, a cofactor that stimulates the LFB1 transactivation significantly. Using the rat cDNA probe, we cloned the corresponding Xenopus sequence XDCoH, encoding a 104 amino acid protein, that is 85% identical to the rat protein. XDCoH enhances the LFB1-dependent transactivation potential in transfection experiments and interacts in vitro directly with LFB1 and its variant form LFB3. The protein is detectable in liver and kidney extracts of adult frogs and in small amounts also in lung and stomach, organs expressing LFB1 and/or LFB3 protein as well. To investigate the possible involvement of XDCoH in Xenopus development, we analyzed its temporal and spatial expression pattern during early embryogenesis. XDCoH is a maternal factor, although LFB1 is absent in the egg. In early cleavage stages, the protein is detectable in the cytoplasm of each blastomere and enters the nuclei of the cells as early as the zygotic transcription in the Xenopus embryo starts. The amount of XDCoH increases dramatically following neurulation, when the formation of liver, pronephros and other organs takes place. Whole-mount immunostaining demonstrates that, in the developing larvae, XDCoH is localized in the nuclei of the hepatocytes, the gut cells and the pronephric cells, tissues of mesodermal and endodermal origin known to contain LFB1 and LFB3. Surprisingly it is also present in the pigmented epithelium surrounding the eye of the embryo, which is derived from the anterior part of the ectodermal neural plates and lacks LFB1. The tissue distribution of XDCoH during embryogenesis suggests that XDCoH is involved in determination and differentiation of various unrelated cell types. It seems likely that XDCoH interaction is not only essential for the function of LFB1 and LFB3 but also for certain other transcription factors.