HSAL2 is a member of a gene family that encodes a group of putative developmental transcription factors. The HSAL gene complex was originally identified on the basis of DNA sequence homology to a region-specific homeotic gene (SAL) in Drosophila. This study reveals a novel, functional 5' exon for HSAL2 and demonstrates that two distinct HSAL2 gene transcripts arise from two overlapping transcription units, resulting in proteins that differ by 25 amino acids. By utilizing functional luciferase reporter assays, two distinct promoters for HSAL2, P1 for the proximal promoter (upstream of exon 1) and P2 for the distal promoter (upstream of exon 1A), were identified. Evaluation of mRNA prevalence and tissue specificity, with particular focus on adult tissues, revealed that production of mRNA from P1 was selective and relatively rare. Production of mRNA from P2 was demonstrably higher and was expressed by a greater number of tissues. In contradistinction, HSAL2 expression directed by P2 was undetectable in some malignant populations as opposed to their normal human counterparts, suggesting a potential role as a tumor suppressor gene. Consensus-binding sites were identified for several transcriptional factors, with multiple sites for WT-1, and Hox-1.3 present within both the P1 and P2 regions. In transient transfection assays, transcription from both HSAL2 P1 and P2 was strikingly repressed by the WT-1 tumor suppressor protein. These findings suggest that an intracellular WT-1/HSAL2 pathway may play a role in development and hematopoiesis.