Nuclear factor EF-C is present in extracts prepared from human HepG2 liver cells and from other, nonliver cell lines and binds to the hepatitis B virus and polyomavirus transcriptional enhancer regions in vitro. An inverted repeat (5'-GTTGCNNNGCAAC-3') is located within both binding regions. Diethyl pyrocarbonate interference binding assays and competition binding experiments using altered binding sites demonstrated that EF-C contacts symmetrical nucleotides within the inverted repeat. Mutations that changed the length of the spacer region between the arms of the inverted repeat were introduced in the hepatitis enhancer region. Introduction of 1 or 2 base pairs between the repeats did not affect EF-C binding, but deletion of 1 base pair or introduction of 3 to 9 base pairs reduced binding dramatically. Introduction of 10 base pairs restored partial EF-C binding ability. These and other results suggest that EF-C binding is stabilized by dimerization. In vivo assays for enhancer function using these mutants demonstrated that the EF-C binding site is a functional and important component of the hepatitis B virus enhancer region.