The product of the c-myc proto-oncogene is a DNA-binding protein, the deregulated expression of which is associated with a variety of malignant neoplasms. The cDNA for the max gene was recently cloned as a result of the ability of its protein product to interact with the c-Myc protein. We studied bacterially produced Max, c-Myc, and a series of truncated c-Myc proteins. Full-length c-Myc alone cannot bind DNA. However, a truncated c-Myc protein comprising the basic, helix-loop-helix, and leucine zipper regions can bind specifically to DNA bearing the sequence GGGCAC(G/A)TGCCC. Max protein, either alone or in a heteromeric complex with full-length c-Myc, binds to the same core sequence. Using a novel combination of chemical and photo-cross-linking analysis, we demonstrate that either Max or a c-Myc/Max heteromeric complex binds to DNA virtually exclusively in a dimeric structure. Using fusion proteins in cultured cells, we establish a number of functional characteristics of Max. First, we show that Max can interact with c-Myc intracellularly in a manner dependent on the integrity of the helix-loop-helix and leucine zipper motifs. Second, a nuclear localization domain that contains the sequence PQSRKKLR is mapped to the carboxy-terminal region of Max. Third, Max lacks a transcriptional activation domain that is functional in Chinese hamster ovary cells when fused to a heterologous DNA-binding domain. These data suggest that Max may serve as a cofactor for c-Myc in transcriptional activation or, by itself, as a transcriptional repressor.