Required for the normal development of the forebrain, eyes and other anterior structures such as the olfactory placodes and pituitary gland. Possible transcriptional repressor. Binds to the palindromic PIII sequence, 5'-AGCTTGAGTCTAATTGAATTAACTGTAC-3'. HESX1 and PROP1 bind as heterodimers on this palindromic site, and, in vitro, HESX1 can antagonize PROP1 activation. Can form heterodimers with PROP1 in binding to DNA Interacts with TLE1. High levels found in the embryonic liver, lower level expression seen in the viscera, amnion and yolk sac. Early expression seen in the anterior midline endoderm and prechordal plate precursor, subsequently activated in the overlying ectoderm of the cephalic neural plate. Later disappears in the mesendoderm while remaining in the prospective prosencephalic region of the neural plate ectoderm, ultimately expression is restricted to Rathke pouch, the primordium of the pituitary. Expressed in embryonic stem cells. Down-regulated during embryonic stem (ES) cell differentiation. Belongs to the ANF homeobox family.