Despite their significance for mammalian embryogenesis, the molecular mechanisms that regulate placental growth and development have not been well defined. The Esx1 homeobox gene is of particular interest because it is among the few regulatory genes that have specific expression and function in the placenta during murine development. In addition, the ESX1 protein contains several notable features that are not often associated with homeoproteins, including an atypical homeodomain of the paired-like class, a proline-rich region that contains an SH3 binding motif, and a novel repeat region consisting of prolines alternating with phenylalanines or asparagines that we term the PF/PN motif. We have found that the ESX1 protein is expressed in the labyrinth layer of the placenta in vivo, where its subcellular localization is primarily cytoplasmic. Our results suggest that this unexpected subcellular localization is conferred by the PF/PN motif, which inhibits nuclear localization of ESX1 in cell culture, as well as its DNA binding activity in vitro. Finally, we show that the proline-rich region of ESX1 mediates interactions in vitro with the c-abl SH3 domain as well as with certain WW domains. We propose that the PF/PN motif provides a novel mechanism for regulating nuclear entry and that the essential function of ESX1 during placental development is mediated by its ability to couple cytoplasmic signal transduction events with transcriptional regulation in the nucleus.