Loss-of-function mutations affecting the dissatisfaction (DSF) nuclear receptor alter both sexual behavior and the sex-specific nervous system in Drosophila. As a step toward understanding the way DSF controls development and function of the nervous system, we have analyzed the regulatory activities of the DSF protein. DSF prefers an atypical DNA half site, AAGTCA. Wild-type DSF, but not the point mutant DSF(7), monomerically binds and represses reporter constructs bearing this site. DSF also contains an atypically long, 356-amino-acid hinge separating its DNA-binding domain (DBD) and ligand-binding domain (LBD). The hinge contains at least two functions: a region that drastically lowers DNA-binding efficiency in vitro, and an amino-terminal repressive domain. The DBD and LBD of DSF, along with major portions of the hinge, are highly conserved in other insects. Ectopic expression of DSF in Drosophila imaginal discs results in developmental disruptions in disc-derived tissues, disruptions which are largely suppressed when DSF is fused to the VP16 activation domain, consistent with a repressive role for DSF. Finally, when tethered to DNA, DSF's hinge and LBD regions act as strong transcriptional repressors in multiple larval and pupal tissues, including many DSF-expressing tissues. These results suggest DSF can repress transcription in vivo, that repression is largely responsible for its ectopic expression phenotypes, and that repression may be a key component of normal DSF function.