The mouse P450 gene Cyp2a-4 encodes the hepatic steroid 15apha-hydroxylase. We have defined in the 5'-flanking sequence of Cyp2a-4 gene, a composite regulatory element (-61AGACCAAAGTCCGGCCTTC-42) which contains a potential CpG methylation site at position -50. Gel-shift assays indicate that this element consists of overlapped binding sites for a hepatocyte-enriched transcription factor HNF-4 and a Sp1-like protein. Moreover, transcription of the Cyp2a-4 gene is activated by coexpression of HNF-4 in HepG2 cells. A mutation (C at -50 to A) abolishes the binding of HNF-4 to the element as well as the transcriptional activation by HNF-4. The methylated C at position -50, however, does not affect HNF-4 binding. Neither the mutation nor the methylation at position -50 affect the binding of Sp1-like protein to the element. It appears, therefore, that HNF-4 activates the hepatic transcription of Cyp2a-4 gene through its direct binding to the regulatory element regardless of the methylation at position -50.