The Autographa californica multinucleocapsid nuclear polyhedrosis virus (AcMNPV) homologous region sequence hr1 is a putative origin of replication (ori) sequence and can also function as a transcriptional enhancer for delayed-early genes. We demonstrate that this 750-bp sequence, carrying five 28-bp core palin-dromes, enhances expression from the very late polyhedrin promoter up to 11-fold in a classical enhancer fashion in transient expression assays. Enhancement is at the level of transcription, as evident from RNase protection assay analysis. It is mediated by an alpha-amanitin-insensitive RNA polymerase from the authentic polyhedrin promoter transcription start site and follows the temporal activation profile characteristic of the polyhedrin promoter. Three lines of evidence conclusively demonstrated that hr1 acts typically as an enhancer of polyhedrin gene transcription independent of its role as an ori: (i) linearized hr1-reporter plasmids, incapable of replicating in the host cell, could enhance transcription from the promoter; (ii) reporter plasmid copy number was not affected by the presence of aphidicolin during transfection; (iii) reporter plasmid DNA recovered from Sf9 cells was sensitive to Dpn I confirming its unreplicated state in the transfection regime followed by us. Molecular dissection of the hr1 sequence elements revealed that a core palindrome alone can function as an ori sequence whereas a palindrome along with flanking sequences is essential for the enhancer activity. Enhancement of luciferase expression from the polyhedrin promoter is a function of the number of core palindromes and flanking sequences. Our results demonstrate that hr1, which has several motifs for enhancer binding proteins and transcription factors, has a dual role associated with both DNA replication and transcriptional enhancement.