A sequence of epithelial cell proliferation, allocation to four principal lineages, migration-associated differentiation, and cell loss occurs along the crypt-villus axis of the mouse intestine. The sequence is completed in a few days and is recapitulated throughout the life-span of the animal. We have used an intestine-specific fatty acid binding protein gene, Fabpi, as a model for studying regulation of gene expression in this unique developmental system. Promoter mapping studies in transgenic mice identified a 20-bp cis-acting element (5'-AGGTGGAAGCCATCACACTT-3') that binds small intestinal nuclear proteins and participates in the control of Fabpi's cephalocaudal, differentiation-dependent, and cell lineage-specific patterns of expression. Immunocytochemical studies using confocal and electron microscopy indicate that it does so by acting as a suppressor of gene expression in the distal small intestine/colon, as a suppressor of gene activation in proliferating and nonproliferating cells located in the crypts of Lieberkühn, and as a suppressor of expression in the growth factor and defensin-producing Paneth cell lineage. The 20-bp domain has no obvious sequence similarities to known transcription factor binding sites. The three functions modulated by this compact element represent the types of functions required to establish and maintain the intestine's remarkably complex spatial patterns of gene expression. The transgenes described in this report also appear to be useful in characterizing the crypt's stem cell hierarchy.