The Hairy/Enhancer of split/Deadpan family of basic helix-loop-helix (bHLH) proteins function as transcriptional repressors. We have examined the mechanisms of repression used by the Hairy and E(SPL) proteins by assaying the antagonism between wild-type or altered Hairy/E(SPL) and Scute bHLH proteins during sex determination in Drosophila melanogaster. Domain swapping and mutagenesis of the Hairy and E(SPL) proteins show that three evolutionarily conserved domains are required for their function: the bHLH, Orange, and WRPW domains. However, the suppression of Scute activity by Hairy does not require the WRPW domain. We show that the Orange domain is an important functional domain that confers specificity among members of the Hairy/E(SPL) family. In addition, we show that a Xenopus Hairy homology conserves not only Hairy's structure but also its biological activity in our assays. We propose that transcriptional repression by the Hairy/E(SPL) family of bHLH proteins involves two separable mechanisms: repression of specific transcriptional activators, such as Scute, through the bHLH and Orange domains and repression of other activators via interaction of the C-terminal WRPW motif with corepressors, such as the Groucho protein.