We previously described the lymphocyte-restricted Ikaros gene encoding a zinc fìnger DNA-binding protein as a potential regulator of lymphocyte commitment and differentiation. Here, we report the isolation of four additional Ikaros transcripts, products of alternate splicing that encode functionally diverse proteins. The Ikaros proteins contain unique combinations of zinc fìnger modules that dictate their overall sequence specificity and affinity. The Ik-1 and Ik-2 proteins can both bind, albeit with different affinities, to the same recognition sequences present in a number of lymphocyte-specific regulatory elements. The Ik-3 and the Ik-4 proteins interact only with a subset of these motifs. The Ik-1 and Ik-2 proteins can strongly stimulate transcription, whereas Ik-3 and Ik-4 are weak activators. Significantly, the transcription activation potential of the Ikaros proteins correlates with their subcellular localization. Upon ectopic expression of the Ikaros isoforms in nonlymphoid cells, Ik-1 and Ik-2 localize to the nucleus, whereas Ik-3 and Ik-4 are predominantly found in the cytoplasm. The Ikaros isoforms are expressed differentially in lymphocytes: Ik-1 and Ik-2 mRNAs are the predominating forms, and Ik-4 is present in significant amounts only in early T-cell progenitors, whereas Ik-3 and Ik-5 transcripts are expressed at relatively low levels throughout lymphocyte development. The ability of the Ikaros gene to generate functionally diverse proteins that may participate in distinct regulatory pathways substantiates its role as a master regulator during lymphocyte development.