Mutations were introduced in 7 kilobases of 5'-flanking rat ac-fetoprotein (AFP) genomic DNA, linked to the chloramphenicol acetyltransferase gene. AFP promoter activity and its repression by a glucocorticoid hormone were assessed by stable and transient expression assays. Stable transfection assays were more sensitive and accurate than transient expression assays in a Morris 7777 rat hepatoma recipient (Hepa7.6), selected for its strong AFP repression by dexamethasone. The segment of DNA encompassing a hepatocyte-constitutive chromatin DNase I-hypersensitive site at -3.7 kilobases and a liver developmental stage-specific site at -2.5 kilobases contains interacting enhancer elements sufficient for high AFP promoter activity in Hepa7.6 or HepG2 cells. Deletions and point mutations define an upstream promoter domain of AFP gene activation, operating with at least three distinct promoter-activating elements, PEI at -65 base pairs, PEII at -120 base pairs, and DE at -160 base pairs. PEI and PEII share homologies with albumin promoter sequences, PEII is a near-consensus nuclear factor I recognition sequence, and DE overlaps a glucocorticoid receptor recognition sequence. An element conferring glucocorticoid repression of AFP gene activity is located in the upstream AFP promoter domain. Receptor-binding assays indicate that this element is the glucocorticoid receptor recognition sequence which overlaps with promoter-activating element DE.The a,-fetoprotein (AFP) gene, a member of the albumin gene family, is expressed by fetal or malignant hepatocytes and repressed in normal mature hepatocytes. This forms the basis of a long-exploited model system to study cell differentiation and its impairment in neoplasia (1). Molecular genetics have brought the AFP model to molecular levels of cell differentiation, toward finely discerning how genes respond to or escape from developmental and growth signals (2,40,41). As yet, little is known about how differential regulation is exerted on the tandemly organized AFPalbumin locus and whether the two genes operate under shared elements of control. However, at least one wellcharacterized transcription factor, the glucocorticoid receptor, is known to selectively shut off the AFP gene in the developing liver (4, 21). This hormonal effect reaches into the mechanisms of neoplastic resistance to differentiation, because the AFP gene in malignant cells is generally refractory to glucocorticoids (2).Analyses of rat AFP gene and chromatin structures have identified domains in the 5' region of the locus potentially involved in its liver-specific, developmental stage-dependent, and glucocorticoid-regulated expression. A promoter domain spanning '230 nucleotides comprises a chromatin DNase I-hypersensitive (DH) site (32, 42, 44) that is selectively suppressed by dexamethasone (44), glucocorticoid receptor recognition sequences, and octamer motifs similar to those present in other genes under developmental and growth control (8). A distal domain (-2 to -4 kilobases [kb] relative to the AFP trans...