To extend our analysis of the regulation of human cytomegalovirus (HCMV) early gene expression, we examined a transcription unit located in the terminal repeats of the long segment of the viral genome. This region encodes a major 1.2-kb RNA which is induced at early times in infection but undergoes its largest increase in abundance after the onset of viral DNA replication. To identify the important cis-acting regulatory elements for this gene, two constructs were prepared for use in transient expression assays. One contained 413 bp of the upstream sequence and 43 bp of the leader sequence fused to the gene for chloramphenicol acetyltransferase (CAT). The second construct included 1,722 bp upstream of the start site of the 1.2-kb RNA, the entire transcribed region with an additional 166-bp insert derived from the CAT gene as an assayable marker, and 2,393 bp downstream of the polyadenylation signal. Both constructs were individually transfected into human fibroblast cells, and the cells were infected with HCMV. RNA specified by the hybrid construct was initiated at the correct position and accumulated with the same kinetics as the authentic viral transcript at early times in the infection but did not undergo the increase in abundance at late at late times. By 5'-end-deletion analysis, we determined that the promoter for the 1.2-kb RNA contains a number of cis-acting elements, the most significant of which are the TATA-like sequence CATAAA at -30 and a sequence corresponding to the binding site for the transcription factor AP-1 at -75. Using extracts prepared from HeLa cells as well as from infected and uninfected fibroblasts in gel retardation assays, we obtained evidence for the specific interaction of a cellular factor(s) with the AP-1 binding site. The pattern of binding differed in the HeLa and fibroblast cells but did not change as a function of the HCMV infection. However, the functional importance of the AP-1 binding site and its key role in the regulation of the 1.2-kb RNA was supported by analysis of constructs containing specific point mutations at this site in gel retardation and transient expression assays. Site-specific mutations in the AP-1 consensus sequence, which resulted in the complete loss of binding to cellular factors, eliminated the basal activity and reduced the inducible promoter activity by eightfold.