Gli-similar 1-3 (Glis1-3) constitute a subfamily of Krüppel-like zinc finger (ZF) transcription factors that are closely related to the Gli protein family. Mutations in GLIS2 are linked to nephronophthisis, a chronic kidney disease characterized by renal fibrosis and atrophy in children and young adults. Currently, very little information exists about the mechanism of action of Glis2, its target genes, or the signaling pathways that regulate its activity. In this study, we show that a region within ZF3 is required for the nuclear localization of Glis2. Analysis of Glis2 DNA binding demonstrated that Glis2 binds effectively to the consensus Glis binding sequence (GlisBS) (G/C)TGGGGGGT(A/C). Although Glis2 was unable to induce transactivation of a GlisBS-dependent reporter, it effectively inhibited the GlisBS-mediated transactivation by Gli1. Mutations that disrupt the tetrahedral configuration of each ZF within Glis2 abolished Glis2 binding to GlisBS and also abrogated its inhibition of Gli1-mediated transactivation. In contrast, Glis2 was able to activate the murine insulin-2 (Ins2) promoter by binding directly to two GlisBS elements located at -263 and -99 within the Ins2 promoter. Phosphomimetic mutation of Ser245 inhibited the binding of Glis2 to GlisBS and dramatically affected its transactivation of the Ins2 promoter and its ability to inhibit GlisBS-dependent transactivation by Gli1. In this study, we demonstrate that Glis2 can function as a transcriptional activator and that post-translational modification within its DNA-binding domain can regulate its transcriptional activity. This control may play a critical role in the Glis2-dependent regulation of target genes and renal function. © 2011 by The American Society for Biochemistry and Molecular Biology, Inc.