Regulation of the glycoprotein hormone a-subunit (GPHa) gene has been studied extensively in pituitary and placental cell lines, but little is known of the transcriptional regulators important for its ectopic expression. To investigate the molecular basis for ectopic expression, it was critical to define cis-regulatory elements and their cognate trans-acting factors that modulate promoter activity in epithelial cell types that do not normally express GPH. DNA-mediated transient expression of promoter-reporter constructs was used to identify a novel negative regulatory element located at the GPHa gene transcription start site. Truncation or site-directed mutagenesis of this element produced up to a 10-fold increase in promoter activity. Electrophoretic mobility shift analysis detected a protein that binds specifically to a DNA motif encompassing the cap site. Based on competitive DNA binding studies with mutated oligonucleotides, it was determined that bases from -5 to -2 and +4 to +11 are critical for protein binding. The DNA sequence flanking the transcription start site from -9 to +11 is an imperfect palindrome; consequently, this motif is referred to as the cap site diad element (CSDE) and the cognate factor as the cap site binding protein (CSBP). CSBP activity was present at different levels in nuclear extracts prepared from a variety of cell types. Significantly, the ratio of activities exhibited by the GPHa promoter with a mutated CSDE compared to the promoter with a wild-type CSDE was dependent on the transfected cell line and its content of CSBP. These results indicate that a negative regulatory element centered at the GPHa gene cap site and its DNA-binding protein make a significant contribution to the production of a-subunit in a variety of tumor tissues. A detailed understanding of this cis/trans pair may further suggest a mechanism to explain, at least in part, how this gene becomes activated in nonendocrine tumors.