␣-Fetoprotein (AFP) transcription is activated early in hepatogenesis, but is dramatically repressed within several weeks after birth. AFP regulation is governed by multiple elements including three enhancers termed EI, EII, and EIII. All three AFP enhancers continue to be active in the adult liver, where EI and EII exhibit high levels of activity in pericentral hepatocytes with a gradual reduction in activity in a pericentral-periportal direction. In contrast to these two enhancers, EIII activity is highly restricted to a layer of cells surrounding the central veins. To test models that could account for position-dependent EIII activity in the adult liver, we have analyzed transgenes in which AFP enhancers EII and EIII were linked together. Our results indicate that the activity of EIII is dominant over that of EII, indicating that EIII is a potent negative regulatory element in all hepatocytes except those encircling the central veins. We have localized this negative activity to a 340-bp fragment. This suggests that enhancer III may be involved in postnatal AFP repression.T he ␣-fetoprotein (AFP) gene, which encodes the major serum protein in the developing mammalian fetus, is transcribed in the yolk sac visceral endoderm, fetal liver, and, to a much lesser extent, in the fetal gut and kidney (1). AFP activation during hepatogenesis occurs as primordial hepatocytes migrate out from the developing foregut (2). The AFP gene continues to be expressed abundantly in hepatocytes during development, but is dramatically repressed postnatally (3); in the liver, this represents a nearly 10,000-fold reduction in transcription (3). The AFP gene is normally expressed at extremely low levels in the adult liver, but can be reactivated during periods of renewed cell growth such as during liver regeneration and in hepatocellular carcinomas (4).Perinatal AFP repression does not occur uniformly in all hepatocytes. Rather, reduced AFP mRNA levels are first seen in hepatocytes that reside in the perivenous regions of the liver, i.e., those cells surrounding the portal triads. AFP repression continues in a gradient-like fashion in a perivenous to pericentral direction (5, 6). Thus, the last cells to express AFP before complete shut-off reside in a single layer of hepatocytes surrounding the central veins. In addition to AFP repression, other transcriptional changes occur in the perinatal liver. In particular, the mRNAs for numerous liver enzymes become zonally expressed, i.e., synthesized exclusively in pericentral or perivenous hepatocytes (reviewed in ref. 7). For example, glutamine synthetase and ornithine aminotransferase are expressed exclusively in a narrow band of cells surrounding the central veins (8-10).Other enzymes, such as carbamoylphosphate synthetase and ornithine transcarbamylase, are expressed in a broad band of hepatocytes encircling the portal triads (10, 11). These periportal and pericentral regions of expression are nonoverlapping. The basis for this position-dependent regulation is not known, but a mathematica...