We describe the cDNA sequences for two human transcription factors, Forkhead RElated ACtivator (FREAC)-1 and -2, that belong to the forkhead family of eukaryotic DNA binding proteins. FREAC-1 and -2 are encoded by distinct genes, are almost identical within their DNA binding domains and in the COOH termini, but are otherwise divergent. Cotransfections with a reporter carrying FREAC binding sites showed that both proteins are transcriptional activators, and deletions located the activation domains to the COOH-terminal side of the forkhead domains. Expression of FREAC-1 and FREAC-2 is restricted to lung and placenta. We show that the promoters of genes for lung-specific proteins such as pulmonary surfactant proteins A, B, and C (SPA, SPB, and SPC) and the Clara cell 10-kDa protein (CC10) contain potential binding sites for FREAC-1 and FREAC-2. DNaseI footprinting verified that FREAC proteins bind to the predicted sites in the CC10 and SPB promoters. While an SPB promoter construct could be transactivated by both FREAC-1 and FREAC-2, CC10 was only activated by FREAC-1. Efficient activation of CC10 by FREAC-1 is shown to be specific for a lung cell line with Clara cell characteristics (H441) and to involve a region of the FREAC-1 protein unable to activate in other cell types.