Schlafen 3 (Slfn3) mediates rodent enterocyte differentiation in vitro and in vivo, required for intestinal function. Little is known about Schlafen protein structure–function relationships. To define the Slfn3 domain that promotes differentiation, we studied villin and sucrase isomaltase (SI) promoter activity in Slfn3-null human Caco-2_BBE cells transfected with full-length rat Slfn3 DNA or truncated constructs. Confocal microscopy and Western blots showed that Slfn3 is predominantly cytosolic. Villin promoter activity, increased by wild type Slfn3, was further enhanced by adding a nuclear exclusion sequence, suggesting that Slfn3 does not affect transcription by direct nuclear action. We therefore sought to dissect the region in Slfn3 stimulating promoter activity. Since examination of the Slfn3 N-terminal region revealed sequences similar to both an aminopeptidase (App) and a divergent P-loop resembling those in NTPases, we initially divided Slfn3 into an N-terminal domain containing the App and P-loop regions, and a C-terminal region. Only the N-terminal construct stimulated promoter activity. Further truncation indicated that both the App and the smaller P-loop constructs enhanced promoter activity similarly to the N-terminal sequence. Point mutations within the N-terminal region (R128L, altering a critical active site residue in the App domain, and L212D, conserved in Schlafens but variable in P-loop proteins) did not affect activity. These results show that Slfn3 acts in the cytosol to trigger a secondary signal cascade that elicits differentiation marker expression and narrows the active domain to the third of the Slfn3 sequence homologous to P-loop NTPases, a first step in understanding its mechanism of action.