E47 and Pip are proteins crucial for proper B-cell development. E47 and Pip cooperatively bind to adjacent sites in the immunoglobulin kappa chain 3′ enhancer and generate a potent transcriptional synergy. We generated protein-DNA computer models to visualize E47 and Pip bound to DNA. These models predict precise interactions between the two proteins. We tested predictions deduced from these models by mutagenesis studies and found evidence for novel direct interactions between the E47 helix-loop-helix domain (Arg 357 or Asp 358) and the Pip N terminus (Leu 24). We also found that precise spatial alignment of the binding sites was necessary for transcriptional synergy and cooperative DNA binding. A Pip dominant negative mutant that cannot synergize with E47 inhibited enhancer activity in plasmacytoma cells and could not activate transcription in pre-B cells. Using electrophoretic mobility shift assays, we found that Pip can bind to the heavy-chain intron enhancer region. In addition, we found that in fibroblasts Pip greatly increased E47 induction of germ line Iμ transcripts associated with somatic rearrangement and isotype class switching. However, a Pip dominant negative mutant inhibited germ line Iμ transcripts. The importance of these results for late B-cell functions is discussed.