A segment of 1,022 base pairs (bp) of the 5'-flanking region of the human albumin gene, fused to a reporter gene, directs hepatoma-specific transcription. Three functionally distinct regions have been defined by deletion analysis: (i) a negative element located between bp -673 and -486, (ii) an enhancer essential for efficient albumin transcription located between bp -486 and -221, and (iii) a promoter spanning a region highly conserved throughout evolution. Protein-binding studies have demonstrated that a liver trans-acting factor which interacts with the enhancer region is the well-characterized transcription factor LF-B1, which binds to promoters of several liver-specific genes. A synthetic oligodeoxynucleotide containing the LF-B1-binding site is sufficient to act as a tissue-specific transcriptional enhancer when placed in front of the albumin promoter. The fact that the same binding site functions in both an enhancer and a promoter suggests that these two elements influence the initiation of transcription through similar mechanisms.