A 469-base pair (bp) upstream regulatory fragment (URF) and the proximal promoter of the carbamoylphosphate synthetase I (CPS) gene were analyzed for their role in the regulation of spatial, developmental, and hormone-induced expression in vivo. The URF is essential and sufficient for hepatocyte-specific expression, periportal localization, perinatal activation and induction by glucocorticoids, and cAMP in transgenic mice. Before birth, the transgene is silent but can be induced by cAMP and glucocorticoids, indicating that these compounds are responsible for the activation of expression at birth. A 102-bp glucocorticoid response unit within the URF, containing binding sites for HNF3, C/EBP, and the glucocorticoid receptor, is the main determinant of the hepatocyte-specific and hormone-controlled activity. Additional sequences are required for a productive interaction between this minimal response unit and the core CPS promoter. These results show that the 469-bp URF, and probably only the 102-bp glucocorticoid response unit, functions as a regulatory module, in that it autonomously executes a correct spatial, developmental and hormonal program of CPS expression in the liver.In liver, many metabolic pathways are predominantly found in either the upstream, periportal region (e.g. gluconeogenesis) or the downstream, pericentral region (e.g. glycolysis) (1-3). Key enzymes of these pathways are therefore expressed in gradients along the sinusoids that connect the portal and the central vein. These zonal differences in gene expression largely avoid futile cycling of opposite metabolic processes (such as between glycolysis and gluconeogenesis) but also comprise complementary functions such as the low and high affinity detoxifying functions of the urea cycle and glutamine synthetase, respectively (1, 2, 4). Because the heterogeneous expression of genes in mammalian liver seems to relate to the function of the organ, much effort has been invested in understanding the mechanisms underlying its regulation. Nevertheless, it remains obscure what causes these differences in porto-central enzyme gradients and how critical the maintenance of these gradients is for preservation of normal liver function. For several hepatic genes it was shown that their localization within the liver is regulated at the transcriptional level (5-8). For that reason, we decided to embark upon a genetic dissection of the regulatory DNA elements that confer periportal expression upon a reporter gene.