The caudal homeobox (cdx) gene family is critical for specification of caudal 
body formation and erythropoiesis. In zebrafish, cdx4 expression is controlled 
by the Wnt pathway, but the molecular mechanism of this regulation is not fully 
understood. Here, we provide evidence that Tcf3 suppresses cdx4 expression 
through direct binding to multiple sites in the cdx4 gene regulatory region. 
Tcf3 requires corepressor molecules such as Groucho (Gro)/TLE and HDAC1 for 
activity. Using zebrafish embryos and cultured mammalian cells, we show that the 
transcription factor E4f1 derepresses cdx4 by dissociating corepressor proteins 
from Tcf3 without inhibiting its binding to cis-regulatory sites in the DNA. 
Further, the E3 ubiquitin ligase Lnx2b, acting as a scaffold protein 
irrespective of its enzymatic activity, counteracts the effects of E4f1. We 
propose that the modulation of Tcf3 repressor function by E4f1 assures precise 
and robust regulation of cdx4 expression in the caudal domain of the embryo.