AvrXa7 is a member of the avrBs3 avirulence gene family, which encodes proteins targeted to plant cells by a type III secretion apparatus. AvrXa7, the product of avrXa7, is also a virulence factor in strain PXO86 of Xanthomonas oryzae pv. oryzae. Avirulence and virulence specificities are associated with the central repeat domain, which, in avrXa7, consists of 25.5 direct repeat units. Mutations in three C-terminal nuclear localization signal motifs eliminated avirulence and virulence activities in rice and severely reduced nuclear localization in a yeast assay system. Both pathogenicity functions and nuclear localization were restored on the addition of the sequence for the nuclear localization signal motif from SV40 T-antigen. The loss of avirulence activity because of mutations in the acidic transcriptional activation domain was restored by addition of the activation domain from the herpes simplex viral protein VP16. The activation domain was also required for virulence activity. However, the VP16 domain could not substitute for the endogenous domain in virulence assays. In gel shift assays, AvrXa7 bound double-stranded DNA with a preference for dA/dT rich sequences. The results indicate that products of the avrBs3-related genes are virulence factors targeted to host cell nuclei and have the potential to interact with the host DNA and transcriptional machinery as part of their mode of action. The results also suggest that the host defensive recognition mechanisms are targeted to the virulence factor site of action.