A series of recombinant baculoviruses containing linker-substituted polyhedrin promoters attached to a reporter gene encoding chloramphenicol acetyl transferase (CAT) were constructed and tested for expression of the gene. The major determinant for promoter activity was narrowed to within eight nucleotides, TAAGTATT, at the start point of polyhedrin mRNA transcription. Mutations within TAAGTATT blocked initiation of transcription from this site and resulted in a 2000-fold decrease in CAT activity. Linker mutations from 12 to 22 bases upstream from the TAAGTATT sequence increased the steady-state levels of RNAs initiated within TAAGTATT and increased CAT expression by up to 50%. Mutations downstream from TAAGTATT and within the region specifying the untranslated RNA leader diminished transcriptional initiation at TAAGTATT and decreased CAT activity two- to 20-fold. The half-lives of CAT RNAs were not noticeably affected by mutations in the untranslated RNA leader region and thus RNA turn-over was not responsible for the reduced levels of these CAT RNAs. Nuclear run-on analysis of two mutant viruses showed that these mutations decrease the rate of transcriptional initiation. Transcriptional initiation thus appears to be the major means of polyhedrin gene regulation. The data define promoter-related roles for TAAGTATT and the sequences specifying the untranslated mRNA leader in transcriptional initiation. A model by which the viral-induced RNA polymerase distinguishes late and very late initiation sites is proposed.