The two highly related PAR basic region leucine zipper proteins TEF and DBP accumulate according to a robust circadian rhythm in liver and kidney. In liver nuclei, the amplitude of daily oscillation has been estimated to be 50-fold and 160-fold for TEF and DBP, respectively. While DBP mRNA expression is the principal determinant of circadian DBP accumulation, the amplitude of TEF mRNA cycling is insufficient to explain circadian TEF fluctuation. Conceivably, daily variations in TEF degradation or nuclear translocation efficiency may explain the discrepancy between mRNA and protein accumulation. In vitro, TEF and DBP bind the same DNA sequences. Yet, in co-transfection experiments, these two proteins exhibit different activation potentials for two reporter genes examined. While TEF stimulates transcription from the albumin promoter more potently than DBP, only DBP is capable of activating transcription efficiently from the cholesterol 7 alpha hydroxylase (C7alphaH) promoter. However, a TEF-DBP fusion protein, carrying N-terminal TEF sequences and the DNA binding/dimerization domain of DBP, enhances expression of the C7alphaH-CAT reporter gene as strongly as wild-type DBP. Our results suggest that the promoter environment, rather than the affinity with which PAR proteins recognize their cognate DNA sequences in vitro, determines the promoter preferences of TEF and DBP.