␣ 1 -Antitrypsin (␣ 1 -AT) is a serum protease inhibitor that is synthesized mainly in the liver, and its rate of synthesis markedly increases in response to inflammation. This increase in ␣ 1 -AT synthesis results in an increase in peptides, like its carboxyl-terminal C-36 peptide (C-36), resulting from ␣ 1 -AT cleavage by proteases. Atherosclerosis is a form of chronic inflammation, and one of the risk factors is elevated plasma cholesterol levels. Because of the correlation between atherosclerosis, plasma cholesterol content, inflammation, and ␣ 1 -AT rate of synthesis, we investigated the effect of the C-36 serpin peptide on hepatic bile acid biosynthesis. We discovered that C-36 is a powerful and specific transcriptional down-regulator of bile acid synthesis in primary rat hepatocytes, through inhibition of the cholesterol 7␣-hydroxylase/CYP7A1 (7␣-hydroxylase) promoter. Mice injected with the C-36 peptide also showed a decrease in 7␣-hydroxylase mRNA. A mutated but very similar peptide did not have any effect on 7␣-hydroxylase mRNA or its promoter. The sterol 12␣-hydroxylase/ CYP8B1 (12␣-hydroxylase) promoter is also downregulated by the C-36 peptide in HepG2 cells but not by the mutated peptide. The DNA element involved in the C-36-mediated regulation of 7␣-and 12␣-hydroxylase promoters mapped to the ␣ 1 -fetoprotein transcription factor (FTF) site in both promoters. The C-36 peptide prevented binding of FTF to its target DNA recognition site by direct interaction with FTF. We hypothesize that the C-36 peptide specifically interacts with FTF and induces a conformational change that results in loss of its DNA binding ability, which results in suppression of 7␣-and 12␣-hydroxylase transcription. These results suggest that peptides derived from specific serum proteins may alter hepatic gene expression in a highly specific manner.Serine protease inhibitors (serpins) are the most common protease inhibitors in mammals and are part of the acute phase response. At sites of inflammation, proteolytic enzymes are released by neutrophils, platelets, mast cells, macrophages, or by any invading microorganisms. Because an uncontrolled proteolytic activity would result in serious unwanted destruction of surrounding tissues, the synthesis of serpins (i.e. ␣ 1 -antichymotrypsin, ␣ 1 -antitrypsin (␣ 1 -AT), 1 and plasminogen activator inhibitor I) is markedly increased (1) to restore homeostasis. Inhibitory serpins interact with their target proteases at a reactive site located within a loop structure of 30 -40 amino acid residues from the carboxyl-terminal end (2). Formation of a stable complex between ␣ 1 -AT and human leukocyte elastase results from the cleavage of the P 1 -PЈ 1 bond in the reactive site loop, generating a 4-kDa carboxyl-terminal fragment of 36 amino acids corresponding to residues 359 -394 (C-36), that remains non-covalently bound to the cleaved ␣ 1 -AT in complex with the protease (3). This reactive site loop is also susceptible to proteolysis by non-target proteases (4), which can give rise to the car...