To better understand DNA recognition and transcription activity by SATB1, the T-lineage-enriched chromatin organizer and transcription factor, we have determined its optimal DNA-binding sequence by random oligonucleotide selection. The consensus SATB1-binding sequence (CSBS) comprises a palindromic sequence in which two identical AT-rich half-sites are arranged as inverted repeats flanking a central cytosine or guanine. Strikingly, the CSBS half-site is identical to the conserved element 'TAATA' bound by the known homeodomains (HDs). Furthermore, we show that the high-affinity binding of SATB1 to DNA is dimerization-dependent and the HD also binds in similar fashion. Binding studies using HD-lacking SATB1 and binding target with increased spacer between the two half-sites led us to propose a model for SATB1-DNA complex in which the HDs bind in an antiparallel fashion to the palindromic consensus element via minor groove, bridged by the PDZ-like dimerization domain. CSBS-driven in vivo reporter analysis indicated that SATB1 acts as a repressor upon binding to the CSBS and most of its derivatives and the extent of repression is proportional to SATB1's binding affinity to these sequences. These studies provide mechanistic insights into the mode of DNA binding and its effect on the regulation of transcription by SATB1.