TBX5 is a member of the T-box gene family and encodes a transcription factor involved in cardiac and limb development. Mutations of TBX5 cause Holt-Oram syndrome (HOS), an autosomal-dominant condition with congenital cardiac defects and forelimb anomalies. Here, we used a GAL4-TBX5 fusion protein in a modified yeast-one hybrid system to elucidate the TBX5 transactivating domain. Using a series of deletion mutations of TBX5, we narrowed down its functional domain to amino acids 339-379 of its C-terminal half; point mutagenesis analysis then showed that the loss of amino acids 349-351 abolished transactivation. This result was confirmed in mammalian cells. Furthermore, wild-type TBX5, but not TBX5 with mutations at the amino acids 349-351, has ability to inhibit NCI-H1299 cell growth also suggesting that these amino acids are crucial for the TBX5 function in mammalian cells. In addition, to identify the nuclear localization signal of TBX5, we searched for cluster of basic amino acids. We found that the deletion of the KRK sequence at amino acids 325-327 mislocalizes TBX5 to cytoplasm, suggesting that these amino acids serve as a nuclear localization signal. These studies enhance our understanding of the structure-function relationship of TBX5 and suggest that truncation mutations of TBX5 could cause HOS through the loss of its transactivating domain and/or the nuclear localization signal.