Activity of the dihydrofolate reductase (dhfr) promoter increases at the G1-S-phase boundary of the cell cycle. Mutations that abolish protein binding to an E2F element in the dhfr promoter also abolish the G1-S-phase increase in dhfr transcription, indicating that transcriptional regulation is mediated by the E2F family of proteins. To investigate the mechanism by which E2F regulates dhfr transcription, we moved the E2F element upstream and downstream of its natural position in the promoter. We found that the E2F element confers growth regulation to the dhfr promoter only when it is proximal to the transcription start site. Using a heterologous E2F element, we showed that position-dependent regulation is a property that is promoter specific, not E2F element specific. We demonstrated that E2F-mediated growth regulation of dhfr transcription requires activation of the dhfr promoter in S phase and that the C-terminal activation domains of E2F1, E2F4, and E2F5, when fused to the Gal4 DNA binding domain, are sufficient to specify position-dependent activation. To further investigate the role of activation in dhfr regulation, we tested other transactivation domains for their ability to activate the dhfr promoter. We found that the N-terminal transactivation domain of VP16 cannot activate the dhfr promoter. We propose that, unlike other E2F-regulated promoters, robust transcription from the dhfr promoter requires an E2F transactivation domain close to the transcription start site.