The retinal protein Nrl belongs to a distinct subfamily of basic motif-leucine zipper DNA-binding proteins and has been shown to bind extended AP-1-like sequence elements as a homo- or heterodimer. Here, we demonstrate that Nrl can positively regulate the expression of the photoreceptor cell-specific gene rhodopsin. Electrophoretic mobility-shift analysis reveals that a protein(s) in nuclear extracts from bovine retina and the Y79 human retinoblastoma cell line binds to a conserved Nrl response element (NRE) in the upstream promoter region of the rhodopsin gene. Nrl or an antigenically similar protein is shown to be part of the bound protein complex by supershift experiments using Nrl-specific antiserum. Cotransfection studies using an Nrl-expression plasmid and a luciferase reporter gene demonstrate that interaction of the Nrl protein with the -61 to -84 region of the rhodopsin promoter (which includes the NRE) stimulates expression of the reporter gene in CV-1 monkey kidney cells. This Nrl-mediated transactivation is specifically inhibited by coexpression of a naturally occurring truncated form of Nrl (dominant negative effect). Involvement of Nrl in photoreceptor gene regulation and its continued high levels of expression in the adult retina suggest that Nrl plays a significant role in controlling retinal function.