Rapid progress in the ability to develop and utilize zinc-finger proteins with customized sequence specificity have led to their increasing use as tools for modulation of target gene transcription in the post-genomic era. In the present paper, a series of in vitro binding assays and in vivo reporter analyses were used to demonstrate that a zinc-finger protein can effectively specify a base at each position of the target site in vivo and that functional activity of the zinc-finger protein as either a transcriptional repressor or activator is positively correlated with its binding affinity. In addition, this correlation can be extended to artificial engineered zinc-finger proteins. These data suggest that the binding affinity of designer zinc-finger proteins with novel specificity might be a determinant for their ability to regulate transcription of a gene of interest.