Our studies show that cis-acting DNA sequences present in the 5'-flanking region are important for the promotion of glucagon gene transcription in islet cell lines. Deletion of all but 292 bp of 5'-flanking sequences results in no major change in the relative magnitude of transcriptional activity in glucagon-producing RIN1056A cells. Moreover, transcriptional activity of the GLUCAT fusion genes is consistently greater in glucagon-producing than in insulin-producing islet cell lines. The cellular specificity of glucagon gene transcription is further emphasized by the lack of transcriptional activity following transfection of non-islet cell lines (BHK, HeLa, and JEG cells) with five different GLUCAT plasmids. These observations suggest that trans-acting factors present in islet cell lines interact with DNA sequences in the 5'-flanking region of the rat glucagon gene to mediate islet cell-specific gene transcription. These studies should provide a useful model for the isolation and characterization of the trans-acting factors important for glucagon gene transcription.