We have identified alternatively spliced isoforms of murine Pax-3 and Pax-7 which differ by the presence or absence of a single glutamine residue in a linker region which separates two distinct DNA-binding subdomains within the paired domain. By reverse transcription-PCR, these isoforms of Pax-3 and Pax-7 (Q+ and Q-) were detected at similar levels through multiple developmental stages in the early mouse embryo. DNA-binding studies using the Q+ and Q- isoforms of Pax-3 revealed that this alternative splicing event had no major effect on the ability of these isoforms to bind to an oligonucleotide specific for the Pax-3 homeodomain (P2) or to a paired domain recognition sequence (e5) that interacts primarily with the N-terminal subdomain of the paired domain. However, DNA-binding studies with sequences (P6CON and CD19-2/A) containing consensus elements for both the N-terminal and C-terminal subdomains revealed that the Q- isoform binds to these sequences with a two- to fivefold-higher affinity; further mutation of the GTCAC core N-terminal subdomain recognition motif of CD19-2/A generated binding sites with a high degree of specificity for the Q- isoform. These differences in DNA binding in vitro were also reflected in the enhanced ability of the Q- isoform to stimulate transcription of a reporter containing multiple copies of CD19-2/A upstream of the thymidine kinase basal promoter. In support of the observations made with these naturally occurring Pax-3 isoforms, introducing a glutamine residue at the analogous position in PAX6 caused a fivefold reduction in binding to P6CON and a complete loss of binding to CD19-2/A and to the C-terminal subdomain-specific probe 5aCON. These studies therefore provide direct evidence for a role for the paired-domain linker region in DNA target site selection, and they identify novel isoforms of Pax-3 and Pax-7 that have the potential to mediate distinct functions in the developing embryo.