Gene regulation by steroid hormones leads to induction or repression of particular sets of genes. These effects are mediated by intracellular hormone receptors that, in the unliganded state, are maintained in an inactive form by unknown mechanisms possibly involving association with other cellular proteins. Induction of the mouse mammary tumor virus (MMTV) requires binding of the hormone receptor to a complex hormone-responsive element (HRE) located between 75 and 190 bp upstream from the start of transcription. The interaction of several receptor molecules with the four receptor binding sites in the HRE is highly cooperative on circular DNA molecules and each individual site is needed for optimal induction. In chromatin the HRE is precisely organized in phased nucleosomes. Following hormone treatment and receptor binding, changes in chromatin structure are detected that correlate with binding of transcription factors, including nuclear factor I, to the MMTV promoter. However, though nuclear factor I acts as a basal transcription factor on the MMTV promoter it does not cooperate with the hormone receptors in terms of binding to free DNA, and mutation of the nuclear factor I binding site does not eliminate hormonal stimulation. This residual induction is mediated by octamer motifs, upstream of the TATA box, that bind the ubiquitous transcription factor OTF-1. Mutation of these octamer motifs does not influence basal transcription in vitro, but completely abolishes the stimulatory effect of progesterone receptor.