The chicken ovalbumin gene is regulated at the level of transcription by four classes of steroid hormones. A steroid-dependent regulatory element (SDRE) found from -900 to -732 is required for this steroid-mediated induction. To define more precisely sequences of the SDRE required for steroidal induction, a series of exonuclease III deletions were made in the 3' end of the SDRE. Fusion genes containing the mutant ovalbumin 5'-flanking sequences linked to the chloramphenicol acetyltransferase structural gene (CAT) were transfected into steroid-responsive primary oviduct cells. These functional studies defined a region of the SDRE from -793 to -759 that is essential for induction by steroids. Analysis of protein interactions in this 34-base pair region by copper-phenanthroline footprinting and methylation interference assays defined nucleotides required for protein binding. Footprinting showed protection of residues extending from -784 to -765, an area that included nucleotides that, when methylated, interfered with protein binding. In addition, this footprinted region contained 10 nucleotides that were identical to sequences contained in the beta-interferon gene regulatory element. An oligomer synthesized to this region of homology produced two DNA-protein complexes with oviduct nuclear proteins. Although this region of the interferon gene regulatory element binds the transcription factor NF-kappa B, an oligomer from the immunoglobulin kappa light chain gene known to bind NF-kappa B did not compete with the SDRE oligomer for binding to oviduct nuclear proteins. Surprisingly, this same NF-kappa B oligomer was able to restore steroid responsiveness to an SDRE mutant, while an oligomer from the immunoglobulin heavy chain gene inserted in the same position did not affect induction by steroids. These data suggest that a protein binding to sequences in the SDRE that are similar to an NF-kappa B-binding site participates in the steroid-mediated increase in transcription of the chicken ovalbumin gene.