An essential step during sex determination is the maintenance of the Müllerian duct in females and its regression in males caused by the expression of Müllerian inhibiting substance (MIS). In testes, the Wilms' tumor suppressor and the orphan nuclear receptor SF1 cooperatively bind to the promoter and activate transcription of MIS. In the ovaries, on the other hand, the orphan nuclear receptor DAX1 binds to SF1, inhibits transactivation by WT1/SF1 and thereby suppresses the induction of MIS expression. In addition, WT1 itself is responsible for the upregulation of DAX1 transcription. So far, little is known on which protein-protein interactions or cofactors elicit the spatiotemporal control of WT1-mediated transcription. Here we demonstrate coexpression of the LIM-only coactivator FHL2 and WT1. FHL2 and WT1 functionally interact both in vitro and in vivo. The importance of this interaction is revealed by the ability of FHL2 to potentiate the synergistic induction of MIS gene expression by WT1/SF1. Moreover, FHL2 coactivates transactivation of the DAX1 promoter by WT1. Hence, we present FHL2 as a novel transcriptional coactivator of WT1. The ability to modulate both DAX1 and MIS expression might allow FHL2 to act in the molecular fine tuning of WT1-dependent control mechanisms in the reproductive organs.