The cysteine proteinase 1 (CP1) gene of Dictyostelium discoideum encodes a developmentally regulated sulfhydryl proteinase. We characterized the DNA sequences upstream of the CP1 gene and found a second developmentally regulated gene, which we term DG17. The translational open reading frame of the DG17 gene encoded a 458-amino-acid cysteine-and lysine-rich protein of unknown function. In several regions, the cysteine and lysine residues were arranged in a manner characteristic of the zinc-binding domains found in proteins which interact with nucleic acids. During normal development, the DG17 and CP1 genes are coordinately activated late in aggregation. The addition of exogenous cyclic AMP (cAMP) induced the premature expression of both mRNAs. By measuring the rate of specific mRNA synthesis in isolated nuclei, we showed that cAMP acted at the transcriptional level to activate both genes. The two genes were separated by 910 nucleotides and were divergently transcribed. The intergenic region was predominantly composed of A+T residues except for four short G-rich regions. These sequences coincided with the positions of four nuclease-hypersensitive sites, which appear during aggregation when the DG17 and CP1 genes are transcribed (J. Pavlovic, E. Banz, and R. W. Parish, Nucleic Acids Res. 14: [8703][8704][8705][8706][8707][8708][8709][8710][8711][8712][8713][8714][8715][8716][8717][8718][8719][8720][8721][8722] 1986). Two of the G-rich regions formed the core of two almost identical 80-nucleotide repeats located 220 and 320 nucleotides upstream of the CP1 gene. Using the Dictyostelium transformation system, we showed that a restriction fragment containing the intergenic region was capable of directing bidirectional transcription in a cAMP-dependent manner.In response to starvation, single cells of Dictyostelium discoideum form aggregates which develop into multicellular fruiting bodies consisting of stalk and spore cells. Aggregation occurs in response to pulsatile emissions of cyclic AMP (cAMP) from a signalling center (22). As multicellular aggregates form, there are major changes in gene expression to yield the new proteins required for cellular differentiation, and approximately 2,000 to 3,000 mRNAs are induced (1,4,5). In addition to its role as a chemoattractant, the rise in extracellular cAMP concentration during aggregation also plays a role in regulating gene expression. The addition of exogenous cAMP to developing cells represses the expression of a number of genes active early in development and induces the premature expression of a group of genes which are active late during aggregation (13,21,26,28,40,46). Although it has been shown that cAMP can alter the rate of transcription of specific genes in D. discoideum (21, 46), the precise mechanism of action of cAMP is not understood. Pharmacological studies suggest that the effects of extracellular cAMP on gene expression are mediated by the cell surface cAMP receptor (12,24,31). In the postaggregative stage, cAMP plays an additional role in controlling gen...