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The DNA binding activities of some basic region and putative helix-loop-helix (bHLH)-containing transcriptional factors can be inhibited by the Id protein. Because Id contains the HLH motif for dimerization but not the basic amino acid region for DNA binding, heterodimers of Id with bHLH transcriptional factors may not bind to DNA. We have isolated and characterized the gene and cDNA clones for a new Id protein, designated Id2. The Id2 protein contains a helix-loop-helix motif similar to that of the previously described Id protein (referred to here as Id1), but the two proteins are different elsewhere. Id1 and Id2 are encoded by two unlinked genes, as shown by chromosome mapping. The two Id proteins have similar inhibitory activities. They selectively bind to and inhibit the function of one set of bHLH proteins, typified by E2A.E47 and E2B.m3, but not that of the other set, including TFE3, USF, and AP4. The Id proteins also homodimerize poorly. Expression of both Id genes is down-regulated during differentiation in a variety of cell types.