Along the anterior-posterior axis of animal embryos, the choice of cell fates, and the organization of morphogenesis, is regulated by transcription factors encoded by clustered homeotic or ‘Hox’ genes. Hox genes function in both epidermis and internal tissues by regulating the transcription of target genes in a position- and tissue-specific manner. Hox proteins can have distinct targets in different tissues; the mechanisms underlying tissue and homeotic protein specificity are unknown. Light may be shed by studying the organization of target gene enhancers. In flies, one of the target genes is teashirt (tsh), which encodes a zinc finger protein. tsh itself is a homeotic gene that controls trunk versus head development. We identified a tsh gene enhancer that is differentially activated by Hox proteins in epidermis and mesoderm. Sites where Antennapedia (Antp) and Ultrabithorax (Ubx) proteins bind in vitro were mapped within evolutionarily conserved sequences. Although Antp and Ubx bind to identical sites in vitro, Antp activates the tsh enhancer only in epidermis while Ubx activates the tsh enhancer in both epidermis and in somatic mesoderm. We show that the DNA elements driving tissue-specific transcriptional activation by Antp and Ubx are separable. Next to the homeotic protein-binding sites are extensive conserved sequences likely to control tissue activation by different homeodomain proteins. We propose that local interactions between homeotic proteins and other factors effect activation of targets in proper cell types.