Through substitution mutagenesis we identified the promoter elements responsible for basal expression and sterol-mediated repression of transcription of the gene for 3-hydroxy-3-methylglutaryl coenzyme A reductase, a rate-controlling enzyme of cholesterol biosynthesis. Mutant promoters containing 277 base pairs (bp) of reductase 5' flanking sequence were inserted into recombinant plasmids upstream of the coding region for bacterial chloramphenicol acetyltransferase. The plasmids were transfected into hamster fibroblasts, and transcription was measured in the presence and absence of sterols. Mutations in three regions that are known to bind nuclear proteins markedly reduced transcription. Mutation of another protein-binding region of 20 bp in length did not reduce transcription, but it did abolish sterol-mediated repression, producing an operator constitutive phenotype. This mutation also abolished protein binding to the corresponding 20-bp region of DNA as determined by footprinting assays. When a DNA fragment containing these 20 bp was inserted into the herpes simplex virus thymidine kinase promoter, sterol-mediated repression was observed. This sequence contains an octanucleotide that shows a 7/8-bp match with a previously identified regulatory sequence in repeat 2 of the low density lipoprotein receptor promoter, another sterol-repressible gene. We hypothesize that this octanucleotide, GTGGCGGTG, is the core binding site for a sterol-dependent protein that represses transcription.