Steroid hormones regulate the transcriptional activity of the chicken ovalbumin gene both in vivo and in cell culture. To identify the regulatory elements involved, primary oviduct cell cultures were transfected with constructs containing the promoter and 5'-flanking region of the ovalbumin gene fused to the bacterial chloramphenicol acetyltransferase (CAT) gene. Induction of the OvCAT genes by estrogen, progesterone, or corticosterone mimics that of the endogenous ovalbumin gene, indicating that the transfected DNA is accurately regulated. Deletion analysis revealed that a steroid response element (SRE) resides between nucleotide coordinates -880 and -585 and that a negative regulatory element (NRE) resides between -350 and -248 in the ovalbumin gene. Thus, an NRE represses expression of the ovalbumin gene unless steroid hormones relieve this negative control through interactions involving a more distal SRE. Neither the SRE nor the NRE alone regulates the heterologous thymidine kinase promoter, suggesting either that they function as a single entity or that they are conditional regulatory elements. The NRE is functional in MCF-7 cells, but the SRE cannot be activated by steroids in this heterologous estrogen-responsive cell line. These data indicate that the steroid-receptor complex induces the ovalbumin gene through direct or indirect actions at an SRE to relieve repression at an NRE.