The human beta-globin locus control region (LCR) is a complex regulatory element that controls the erythroid-specific expression of all cis-linked globin genes. The LCR is composed of five DNase I hypersensitive sites (HS) spanning 16 kb and located greater than 50 kb upstream of the beta-globin gene on chromosome 11. Constructs containing all or some of these HS have been shown to produce high-level erythroid-specific expression of linked genes in transgenic mice and transfected cells. In all transgenic and transfection experiments reported to date, however, the spatial relationships between the LCR and globin genes have been disrupted. We have used homologous recombination (HR) as an approach to gain insights into the potential interactions between the LCR and globin genes in their native locations. A hygromycin B resistance (hygro(R)) gene was inserted into the human beta-globin LCR on chromosome 11 in a mouse/human hybrid erythroid cell line that expresses the human beta-globin gene after the induction of differentiation. As a consequence of this targeted insertion, the beta-globin gene is transcriptionally inactive and not inducible. In contrast, the hygro(R) gene within the LCR is inducible, whereas randomly integrated hygro(R) genes are not inducible in these cells. The chromatin structure of the targeted locus is also altered. A new DNase I HS is present in the enhancer/promoter of the hygro(R) gene inserted into the LCR, whereas a HS normally present in the LCR 3' to the insertion is lost and the beta-globin gene promoter HS is not detectable. These results are consistent with the promoter/enhancer competition model for LCR function and globin gene switching.