The human dhfr minor transcript is distinguished from the predominant dhfr mRNA by an approximately 400 nucleotide extension of the 5'-untranslated region, which corresponds to the major (core) promoter DNA (its template). Based on its unusual sequence composition, we hypothesized that the minor transcript 5'-UTR might be capable of altering transcription pre-initiation complex assembly at the core promoter, through direct interactions of the RNA with specific regulatory polypeptides or the promoter DNA itself. We found that the minor transcript 5'-UTR selectively sequesters transcription factor Sp3, and to a lesser extent Sp1, preventing their binding to the dhfr core promoter. This allows a third putative transcriptional regulatory protein, which is relatively resistant to sequestration by the minor transcript RNA, the opportunity to bind the dhfr core promoter. The selective sequestration of Sp3 > Sp1 by the minor transcript 5'-UTR involves an altered conformation of the RNA, and a structural domain of the protein distinct from that required for binding to DNA. As a consequence, the minor transcript 5'-UTR inhibits transcription from the core promoter in vitro (in trans) in a concentration-dependent manner. These results suggest that the dhfr minor transcript may function in vivo (in cis) to regulate the transcriptional activity of the major (core) promoter.