We have earlier shown that transcriptional activation of the Candida drug resistance gene, CDR1, is linked to various stresses wherein a proximal promoter (-345 bp from the transcription start point (TSP)) was found to be predominantly more responsive. In this study we have examined basal expression of the CDR1 proximal promoter by employing a Renilla luciferase reporter system. We observed that upon sequential deletion of the proximal promoter, there was modulation in basal reporter activity. The reporter activity was highest (2.3-fold) in NGY261 (-261 bp from TSP), and was reduced upon subsequent deletions. DNase I footprinting revealed four protected regions (W1, W2, W3 and W4) in the proximal promoter which could represent possible trans-acting factor binding sites and thus might be involved in CDR1 expression. Site-directed mutational analysis of three of these protected regions did not significantly affect the basal reporter activity, however, the mutation of W1 led to a considerable enhancement in reporter activity (approximately 4-fold) and was designated a negative regulatory element (NRE). Mutation as well as deletion of the W1 sequence in the native promoter (-1147 bp from TSP) and sequential deletion of the 5'-flanking region-harboring W1 (NRE) also resulted in enhanced promoter reporter activity. When the reporter activity of native (NPY1147) and NRE-mutated (NGYM1147) promoter integrants was monitored throughout the growth phase of Candida albicans, there was modulation in reporter activity in both integrants, but interestingly the level of basal reporter activity of the NRE-mutated promoter was always approximately 3-fold higher than that of the native promoter. UV cross-linking and affinity purification confirmed that a purified approximately 55-kDa nuclear protein specifically interacts with the NRE. Taken together, we have identified a NRE and purified its interactive protein, which may be involved in controlling basal expression of CDR1.