Interaction between the stage selector element (SSE) in the proximal gamma-globin promoter and hypersensitivity site 2 in the locus control region partly mediates the competitive silencing of the beta-globin promoter in the fetal developmental stage. We have now demonstrated that a second SSE-like element in the 5'-untranslated region of the gamma-gene also contributes to this competitive silencing of the beta-gene. Utilizing transient transfection assays in the fetal erythroid cell line, K562, we have shown that the core enhancer of hypersensitivity site 2 can preferentially interact with the proximal gamma-promoter in the absence of the SSE, completely silencing a linked beta-promoter. Mutation of a 20-base pair sequence of the gamma-gene 5'-untranslated region (UTR) led to derepression of beta-promoter activity. A marked activation of gamma-promoter activity was also observed with this mutation, suggesting the presence of a repressor. Fine mutagenesis dissected these activities to different regions of the 5'-UTR. The stage selector activity was localized to a region centered on nucleotides +13 to +15. Electromobility shift assays utilizing this sequence demonstrated binding of a fetal and erythroid-specific protein. The repressor activity of the 5'-UTR was localized to tandem GATA-like sites, which appear to bind a complex of two proteins, one of which is the erythroid transcription factor GATA-1. These results indicate that the 5'-UTR of the gamma-gene contains sequences that may be important for its transcriptional and developmental regulation.