The AE1 gene is expressed in erythrocytes and the A-type intercalated cells of the kidney distal collecting duct. Although the 5' end of the principal transcript expressed in murine erythroid cells has previously been mapped to a cluster of transcription start sites located immediately upstream of exon 1, the 5' end of the mouse kidney transcript has not been identified. Using the anchored polymerase chain reaction technique to analyze mouse kidney AE1 mRNA, we identified an internal transcription start site located within erythroid intron 3. This site defines an exon of 37 nucleotides that forms the 5' end of the mouse kidney AE1 transcript. AE1 transcripts beginning at this internal start site could not be detected in RNA isolated from purified erythroid progenitor cells or from erythroid cells undergoing erythropoietin-dependent terminal maturation, although transcripts derived from the upstream site were abundant, indicating that only the upstream promoter is active during erythropoiesis. Transient expression of reporter constructs in erythroid and nonerythroid cell lines identified a proximal upstream region of approximately 135 nucleotides that was active as a basal promoter. However, an additional approximately 200 nucleotides of upstream sequence was required for induced levels of activity in erythroid cells. Although our functional approach does not yet indicate the precise sequences required for erythroid induction, the AE1 gene upstream region contains potential GATA sites at -154, -141, and -60; an E-box at -163; CACCC or GGTGG motifs at -188, -121, and -88; and an AP-1/NF-E2-like site at -42.