Recent determination of the cAMP response element-binding protein (CREB) basic leucine zipper (bZIP) consensus CRE crystal structure revealed key dimerization and DNA binding features that are conserved among members of the CREB/CREM/ATF-1 family of transcription factors. Dimerization appeared to be mediated by a Tyr(307)-Glu(312) interhelical hydrogen bond and a Glu(319)-Arg(314) electrostatic interaction. An unexpected hexahydrated Mg(2+) ion was centered above the CRE in the dimer cavity. In the present study, we related these features to CREB dimerization and DNA binding. A Y307F substitution reduced dimer stability and DNA binding affinity, whereas a Y307R mutation produced a stabilizing effect. Mutation of Glu(319) to Ala or Lys attenuated dimerization and DNA binding. Mg(2+) ions enhanced the binding affinity of wild-type CREB to the palindromic CRE by approximately 20-fold but did not do so for divergent CREs. Similarly, mutation of Lys(304), which mediates the CREB interaction with the hydrated Mg(2+), blocked CREB binding to the palindromic but not the variant CRE sequences. The distinct binding characteristics of the K304A mutants to the consensus and variant CRE sequences indicate that CREB binding to these elements is differentially regulated by Mg(2+) ions. We suggest that CREB binds the consensus and variant CRE sequences through fundamentally distinct mechanisms.