The peripherin gene, encoding a neuron-specific intermediate filament protein, is transcriptionally induced when PC12 cells begin to terminally differentiate into neurons in response to nerve growth factor. Previously we identified two regulatory sequences of the peripherin gene: a proximal negative element (centered at -173), which prevents peripherin expression in undifferentiated PC12 cells, and a distal positive region (-2660 to -2308) necessary for full induction of peripherin in differentiated PC12 cells (Thompson, M., Lee, E. Lawe, D., Gizang-Ginsberg, E., and Ziff, E. (1992) Mol. Cell. Biol. 12,2501-2513). Here we define a distal positive element (DPE, -2445 to -2337) within the distal positive region. Methylation interference footprinting of the DPE identified DNA-protein contact points at a novel inverted repeat sequence (AACCACTGGTT) and an Ets-like recognition sequence (CAGGAG). Functional analysis using site-directed mutagenesis demonstrates that both sites are necessary for the activity of the DPE. In addition, ternary complex formation at the DPE is dependent on both sites. Antibody competition assays confirm that an Ets family member participates in the DNA-protein complex. We have indirect evidence that the inverted repeat binding protein and the Ets-related protein interact directly with each other. Finally, we demonstrate that the DPE is constitutively active and that neuron-specific regulation of peripherin expression may be due to interaction with distal and proximal negative regulatory elements.