Heterozygous loss-of-function mutations in ZIC2 result in the severe brain malformation known as holoprosencephaly (HPE), indicating that forebrain development is exquisitely sensitive to the activity of this poorly understood transcription factor. To identify the regions of ZIC2 that are essential for activity, we have assessed the ability of a variety of ZIC2 mutant proteins to function in in vitro assays. Two sources of information were used to design relevant mutations. First, phenotype producing mutations in human and in mouse ZIC2 were mimicked and secondly, a comparative sequence analysis of the C-terminal was carried out. Analysis of these mutations suggests that either a decrease or an increase in ZIC2 mediated transcriptional activity can produce a forebrain phenotype. In addition, the analysis reveals that the C-terminal of ZIC2 contains both activation and repression domains. This region of ZIC2 contains an alanine-tract, and expansion of this domain is associated with HPE. In vitro analysis of proteins with alterations in alanine-tract length illustrates that the C-terminal alanine-tract of ZIC2 influences the strength of DNA binding and alters transcriptional activity in a promoter-specific manner. This finding provides a possible mechanism by which alanine-tract expansion mutations could alter the function of other transcription factors.