Key components of DNA replication and the basal transcriptional machinery as well as several tissue-specific transcription factors are compartmentalized in specialized nuclear domains. In the present study, we show that determinants of subnuclear targeting of the bone-related Runx2/Cbfa1 protein reside in the C-terminus. With a panel of C-terminal mutations, we further demonstrate that targeting of Runx2 to discrete subnuclear foci is mediated by a 38 amino acid sequence (aa 397-434). This nuclear matrix-targeting signal (NMTS) directs the heterologous Gal4 protein to nuclear-matrix-associated Runx2 foci and enhances transactivation of a luciferase gene controlled by Gal4 binding sites. Importantly, we show that targeting of Runx2 to the NM-associated foci contributes to transactivation of the osteoblast-specific osteocalcin gene in osseous cells. Taken together, these findings identify a critical component of the mechanisms mediating Runx2 targeting to subnuclear foci and provide functional linkage between subnuclear organization of Runx2 and bone-specific transcriptional control.