Several studies have established that the prolactin (PRL) gene is expressed not only in lactotrophs and somatotrophs of the anterior pituitary but, albeit to a lesser extent, in non-pituitary cells like human thymocytes, decidualized endometrium, mammary glands during lactation, and some human non-pituitary cell lines. Despite the requirement in the pituitary for the pituitary-specific transcription factor Pit-1/GHF-1 for PRL expression, the expression in non-pituitary cells occurs in the absence of Pit-1/GHF-1 and can be repressed by glucocorticoids. This prompted us to investigate the transcription factors in non-pituitary cells which are involved in controlling expression and glucocorticoid repression of a previously characterized negative glucocorticoid response element from the bovine prolactin gene (PRL3 nGRE). Here we have demonstrated that non-pituitary cells (COS-7 and mouse hepatoma Hepa1c1c7 cells) conferred increased expression via the PRL3 nGRE mainly because of the binding of the ubiquitously expressed POU-homeodomain-containing octamer transcription factor-1 (Oct-1) to an AT-rich sequence present in the PRL3 sequence. However, full transcriptional activity required the binding of a second ubiquitously expressed homeodomain-containing protein, Pbx, previously shown to bind cooperatively with several homeotic selector proteins. The Pbx binding site in the PRL3 nGRE, located just upstream of the Oct-1 binding site, showed a strong sequence similarity with known Pbx binding sites and bound Pbx with an affinity similar to that of other established Pbx target sequences. Interestingly, both Oct-1 and Pbx binding to the PRL3 nGRE were found to be required for glucocorticoid repression. Addition of in vitro translated glucocorticoid receptor DNA binding domain to the nuclear extract prevented Oct-1 and Pbx from binding to the PRL element. The involvement of the homeobox protein Pbx in glucocorticoid repression via an nGRE identifies a new role for this protein.