Small differences in the levels of an extracellular signaling molecule can specify cell fate during development. Threshold responses are often determined at the level of transcription. Cell-specific and spatially localized patterns of gene expression depend on combinations of sequence-specific activators and repressors that bind to extensive cis-regulatory regions. Different mechanisms for integrating this complex regulatory information are discussed, particularly the role of coregulatory proteins, which are recruited to the DNA template by sequence-specific transcription factors. Recent studies suggest that a growing set of coactivators and corepressors mediate communication between diverse upstream regulatory proteins and the core RNA polymerase II transcription complex.