Steroid hormone receptors regulate mouse mammary tumor virus (MMTV) gene expression by binding to hormone response DNA elements present in the long terminal repeat. Tissue-specific expression of MMTV is unlikely to be regulated by steroid hormone-receptor complex alone, and mammary cell-specific factors might play a role in the hormone-induced transcriptional activation. In this report we have investigated the function of a novel cis-acting element designated Kil (-204 to -188) which is located adjacent to the distal glucocorticoid response element, in steroid hormone-induced transcription of MMTV. Electrophoretic mobility shift assays indicate that cellular factors bind to the Kil element, and dexamethasone stimulation results in alterations in the binding pattern of proteins in this region. By transient transfection assays using wild type and deletion mutants of the Kil element, we show that this novel cis-acting element is necessary for hormone-induced transcription of MMTV and functions in mammary tumor cells but not in NIH/3T3 cells. Mutagenesis of the Kil sequence suggests that the entire Kil element functioning as one unit is necessary for hormone-induced transcription of MMTV. When placed in the context of heterologous promoters, neither Kil element nor glucocorticoid response element is able to induce significant hormone-induced transcription of MMTV. The presence of both the DNA elements in tandem results in optimal induction of transcription in the presence of steroid hormones. Our results also indicate that the Kil element functions in human breast carcinoma cell lines such as T47D and MCF-7. These results suggest that Kil element in combination with distal glucocorticoid response element functions as a mammary cell-specific enhancer to regulate MMTV transcription.