The Drosophila Homothorax (HTH) and Extradenticle (EXD) are two homeoproteins required in a number of developmental processes. EXD can function as a cofactor to Hox proteins. Its nuclear localization is dependent on HTH. In this study we present evidence of in vivo physical interaction between HTH and EXD, mediated primarily through an evolutionarily conserved MH domain in HTH. This interaction is essential for the mutual stabilization of both proteins, for EXD nuclear localization, and for the cooperative DNA binding of the EXD-HTH heterodimer. Some in vivo functions require both EXD and HTH in the nucleus, suggesting that the EXD-HTH complex may function as a transcriptional regulator.