Aberrant expression of the alpha-fetoprotein (AFP) gene is characteristic of a majority of hepatocellular carcinoma cases and serves as a diagnostic tumor-specific marker. By dissecting regulatory mechanisms through electromobility gel shift, transient-transfection, Western blot, and in vitro transcription analyses, we find that AFP gene expression is controlled in part by mutually exclusive binding of two trans-acting factors, p53 and hepatic nuclear factor 3 (HNF-3). HNF-3 protein activates while p53 represses AFP transcription through sequence-specific binding within the previously identified AFP developmental repressor domain. A single mutation within the DNA binding domain of p53 protein or a mutation of the p53 DNA binding element within the AFP developmental repressor eliminates p53-repressive effects in both transient-transfection and cell-free expression systems. Coexpression of p300 histone acetyltransferase, which has been shown to acetylate p53 and increase specific DNA binding, amplifies the p53-mediated repression. Western blot analysis of proteins present in developmentally staged, liver nuclear extracts reveal a one-to-one correlation between activation of p53 protein and repression of AFP during hepatic development. Induction of p53 in response to actinomycin D or hypoxic stress decreases AFP expression. Studies in fibroblast cells lacking HNF-3 further support a model for p53-mediated repression that is both passive through displacement of a tissue-specific activating factor and active in the presence of tissue-specific corepressors. This mechanism for p53-mediated repression of AFP gene expression may be active during hepatic differentiation and lost in the process of tumorigenesis.Loss of tumor suppressor p53 function has broad-ranging effects on many cellular processes, including DNA repair, DNA replication, and cell cycle control, and is a critical step in the progression of many human cancers (reviewed in references 32, 46, and 51). p53 is frequently portrayed as an emergency response molecule, activated only under conditions of high stress or DNA damage. However, studies of cellular differentiation and p53 function (24,55,66,70,80), as well as overexpression of p53 in transgenic mice (24) or knockout of its genetic repressor MDM 2 (10), have underscored the importance of maintaining tightly regulated p53 activity during normal development.The pleiotropic effects of p53 are most often ascribed to p53-mediated transcriptional activation of downstream target genes (reviewed in references 32, 46, and 51). However, studies of apoptosis inhibitors, including adenovirus E1B-19kD, bcl-2, and WT-1 proteins (56, 68), indicate that p53 may also control cell growth and death by means other than transcription activation. One proposed mechanism is p53-mediated repression of gene expression. For example, activation of p53 protein by UV irradiation of murine embryo-derived fibroblast cell lines downregulated transcription of genes involved in the apoptotic response of cells to stress, e.g., the MAP4 micr...