Homeo domain-containing proteins mediate many transcriptional processes in eukaryotes. Because nearly all animal homeo proteins are believed to bind to short, highly related DNA sequences, the basis for their high specificity of action is not understood. We show that cooperative dimerization on palindromic DNA sequences can provide increased specificity to one of the three major classes of homeo domains, the Paired/Pax class. The 60-amino-acid homeo domains from this class contain sufficient information to bind cooperatively as homo- and heterodimers to palindromic DNA sequences; that is, the binding of one homeo domain molecule can increase the affinity of a second molecule by up to 300-fold. Different members of the Paired (Prd) class of homeo domains prefer different spacings between half-sites, as determined by the ninth amino acid residue of the recognition helix. In addition, this residue determines the identity of the base pairs at the center of the palindromic sites, as well as the magnitude of the cooperative interaction. The cooperative dimerization of homeo domains in the Prd class distinguishes them from other classes, whereas binding-site configuration and sequence specificity allow for distinctions within this class.