A 268-base pair 5' distal fragment, SX2, which mediates basal level and inducer-dependent activation of the mouse heme oxygenase-1 gene, contains two activator protein-1 (AP-1) binding sites (Alam, J., and Zhining, D. (1992) J. Biol. Chem. 267, 21894-21900). Mutation of both AP-1 binding elements diminishes (by 50-70%), but does not abolish, the enhancer activity of SX2 in transient expression assays, suggesting that other sequences contribute to enhancer function. Directly upstream of the AP-1 binding sites are two copies of a sequence motif, TGAGGAAAT, which resemble elements found in cellular and viral genes that are known to interact with the CCAAT/enhancer-binding protein (C/EBP) family of transcription factors. These SX2 sequences bind specifically to liver-enriched, heat-stable nuclear proteins and confer C/EBP alpha-dependent transactivation of the heterologous chloramphenicol acetyltransferase (CAT) gene. Site-directed mutagenesis of these 9-base pair elements abolishes protein binding and transactivation, establishing these sequences as functional C/EBP binding sites. Stably transfected SX2/CAT fusion genes are induced between 37- and 44-fold in mouse hepatoma, Hepa, cells and between 52- and 111-fold in mouse fibroblast L929 cells in response to CdCl2 treatment. Subfragments of SX2 lacking the AP-1 binding elements do not mediate cadmium-dependent activation of the CAT gene, whereas subfragments containing the AP-1 binding elements, but lacking the C/EBP binding sites, exhibit only partial transcriptional activity. Site-directed mutagenesis of one or more of the C/EBP and AP-1 binding sites indicates that each of these elements is required for optimal activity of the SX2 enhancer fragment. The AP-1 binding elements, however, appear to be more important for induction as constructs containing multiple copies of either of the AP-1 binding elements, but not the C/EBP binding sequences, are readily activated by CdCl2. Treatment of Hepa cells with cadmium or heme does not alter the nuclear concentration of AP-1 or C/EBP binding activity.