Mutations in the FOXC1 gene result in Axenfeld-Rieger malformations of the anterior segment of the eye and lead to an increased susceptibility of glaucoma. To understand how the FOXC1 protein may function in contributing to these malformations, we identified functional regions in FOXC1 required for nuclear localization and transcriptional regulation. Two regions in the FOXC1 forkhead domain, one rich in basic amino acid residues, and a second, highly conserved among all FOX proteins, were necessary for nuclear localization of the FOXC1 protein. However, only the basic region was sufficient for nuclear localization. Two transcriptional activation domains were identified in the extreme N- and C-terminal regions of FOXC1. A transcription inhibitory domain was located at the central region of the protein. This region was able to reduce the trans-activation potential of the C-terminal activation domain, as well as the GAL4 activation domain. Lastly, we demonstrate that FOXC1 is a phosphoprotein, and a number of residues predicted to be phosphorylated were localized to the FOXC1 inhibitory domain. Removal of residues 215-366 resulted in a transcriptionally hyperactive FOXC1 protein, which displayed a reduced level of phosphorylation. These results indicate that FOXC1 is under complex regulatory control with multiple functional domains modulating FOXC1 transcriptional regulation.