MOTIVATION: Identifying the target genes regulated by transcription factors (TFs) is the most basic step in understanding gene regulation. Recent advances in high-throughput sequencing technology, together with chromatin immunoprecipitation (ChIP), enable mapping TF binding sites genome wide, but it is not possible to infer function from binding alone. This is especially true in mammalian systems, where regulation often occurs through long-range enhancers in gene-rich neighborhoods, rather than proximal promoters, preventing straightforward assignment of a binding site to a target gene. RESULTS: We present EMBER (Expectation Maximization of Binding and Expression pRofiles), a method that integrates high-throughput binding data (e.g. ChIP-chip or ChIP-seq) with gene expression data (e.g. DNA microarray) via an unsupervised machine learning algorithm for inferring the gene targets of sets of TF binding sites. Genes selected are those that match overrepresented expression patterns, which can be used to provide information about multiple TF regulatory modes. We apply the method to genome-wide human breast cancer data and demonstrate that EMBER confirms a role for the TFs estrogen receptor alpha, retinoic acid receptors alpha and gamma in breast cancer development, whereas the conventional approach of assigning regulatory targets based on proximity does not. Additionally, we compare several predicted target genes from EMBER to interactions inferred previously, examine combinatorial effects of TFs on gene regulation and illustrate the ability of EMBER to discover multiple modes of regulation. AVAILABILITY: All code used for this work is available at http://dinner-group.uchicago.edu/downloads.html.