Selective transcription of the insulin gene in pancreatic beta cells is regulated by its enhancer, located between nucleotides -340 and -91 relative to the transcription start site. Transcription from the enhancer is controlled by both positive- and negative-acting cellular factors. Cell-type-specific expression is mediated principally by a single cis-acting enhancer element located between -100 and -91 in the rat insulin II gene (referred to as the insulin control element [ICE]), which is acted upon by both of these cellular activities. Analysis of the effect of 5' deletions within the insulin enhancer has identified a region between nucleotides -217 and -197 that is also a site of negative control. Deletion of these sequences from the 5' end of the enhancer leads to transcription of the enhancer in non-insulin-producing cells, even though the ICE is intact. Derepression of this ICE-mediated effect was shown to be due to the binding of a ubiquitously distributed cellular factor to a sequence element which resides just upstream of the ICE (i.e., between nucleotides -110 and -100). We discuss the possible relationship of these results to cell-type-specific regulation of the insulin gene.