We have established a transgenic model to facilitate the study of stress-induced gene regulation in the hypothalamus. This model, which uses a human proenkephalin-beta-galactosidase fusion gene, readily permits anatomic and cellular colocalization of stress-regulated immediate early gene products (e.g. Fos) and other transcription factors [e.g. cAMP response element-binding protein (CREB)] with the product of a potential target gene. Moreover, Fos provides a marker of cellular activation that is independent of the transgene. Hypertonic saline stress induced Fos in almost all cells in the PVN that exhibited basal expression of the proenkephalin transgene; however, all cells in which the transgene was activated by stress also expressed Fos. CREB was found in essentially all neurons. Gel shift analysis with and without antisera to Fos and CREB showed that AP-1 binding activity, containing Fos protein, was induced by hyperosmotic stress. However, Fos was not detected binding to the proenkephalin second messenger-inducible enhancer even in hypothalamic cell extracts from stressed animals. In contrast, CREB formed specific complexes with both the proenkephalin enhancer and a cAMP- and calcium-regulated element (CaRE) within the c-fos gene. Moreover, we found that hypertonic saline induced CREB phosphorylation in cells that express the transgene within the paraventricular nucleus and supraoptic nucleus. These results suggest a model in which proenkephalin gene expression in the paraventricular nucleus is regulated by CREB in response to hypertonic stress.