Thyroid transcription factor gene 1 (TTF-1) is a homeobox-containing gene involved in thyroid organogenesis. During early thyroid development, the homeobox gene Nkx-2.5 is expressed in thyroid precursor cells coincident with the appearance of TTF-1. The aim of this study was to investigate the molecular mechanisms underlying thyroid-specific gene expression. We show that the Nkx-2.5 C terminus interacts with the TTF-1 homeodomain and, moreover, that the expression of a dominant-negative Nkx-2.5 isoform (N188K) in thyroid cells reduces TTF-1-driven transcription by titrating TTF-1 away from its target DNA. This process reduced the expression of several thyroid-specific genes, including pendrin and thyroglobulin. Similarly, down-regulation of TTF-1 by RNA interference reduced the expression of both genes, whose promoters are sensitive to and directly associate with TTF-1 in the chromatin context. In conclusion, we demonstrate that pendrin and thyroglobulin are downstream targets in vivo of TTF-1, whose action is a prime factor in controlling thyroid differentiation in vivo.