Activation of transcription by the SV40 enhancer decreases in an apparently biphasic manner when DNA sequences are interposed between the SV40 enhancer and either the homologous SV40 early or the heterologous conalbumin promoter elements. With increasing lengths of short DNA fragments (up to about 150 bp) activation of transcription decreases to less than 10% of the maximum. This short range effect is observed for both the SV40 early and conalbumin promoter elements and for either orientation of the SV40 enhancer. With the conalbumin promoter, increasing the length of the interposing DNA to 275 bp decreases activation to approximately 4%. Larger inserts, of 650 or 3737 bp, lead to an activation of 0.5%. However, in these recombinants, transcription is still activated at least 10 fold compared to an enhancerless recombinant. The implication of these results is discussed.