optomotor-blind (omb) and optomotor-blind related-1 (org-1) encode T-domain DNA binding proteins in Drosophila. Members of this family of transcription factors play widely varying roles during early development and organogenesis in both vertebrates and invertebrates. Functional specificity differs in spite of similar DNA binding preferences of all family members. Using a series of domain swap chimeras, in which different parts of OMB and ORG-1 were mutually exchanged, we investigated the relevance of individual domains in vitro and in vivo. In cell culture transfection assays, ORG-1 was a strong transcriptional activator, whereas OMB appeared neutral. The main transcriptional activation function was identified in the C-terminal part of ORG-1. Also in vivo, OMB and ORG-1 showed qualitative differences when the proteins were ectopically expressed during development. Gain-of-function expression of OMB is known to counteract eye formation and resulted in the loss of the arista, whereas ORG-1 had little effect on eye development but caused antenna-to-leg transformations and shortened legs in the corresponding gain-of-function situations. The functional properties of OMB/ORG-1 chimeras in several developmental contexts was dominated by the origin of the C-terminal region, suggesting that the transcriptional activation potential can be one major determinant of developmental specificity. In late eye development, we observed, however, a strong influence of the T-domain on ommatidial differentiation. The specificity of chimeric omb/org-1transgenes, thus, depended on the cellular context in which they were expressed. This suggests that both transcriptional activation/repression properties as well as intrinsic DNA binding specificity can contribute to the functional characteristics of T-domain factors.