The replacement histone H1(0) of the H1 group, known to interact with general transcription factors, has been found associated with transcriptionally repressed chromatin. Transcription of the gene in F9 stem cells is low but can be stimulated by treating the cells with retinoic acid. Using mutant deletions, we now demonstrate that basal level transcription in F9 cells is mediated by an 80 bp DNA fragment, located 430 bp upstream of the TATA box, which does not include the retinoic acid responsive element (RARE) known to bind retinoic acid receptors and stimulate transcription from an heterologous promoter after retinoic acid treatment. By footprinting, DMS interference, site-directed mutagenesis and UV-cross linking techniques we demonstrate that at least two nuclear factors, with MW of 90,000 and 30,000, bind to the 80 bp fragment and that this binding is necessary for transcription. Furthermore, positioning of this fragment upstream of the HSV-tk gene promoter stimulates transcription 2-3 times over control values, far less than the activity observed for this fragment in the homologous promoter, indicating that full activity of this fragment requires sequences located in the proximal part of the promoter.