We used several quantitative assays of in vivo transient gene expression to dissect the elements within the Rous sarcoma virus long terminal repeat (LTR) which constitute the retroviral transcription control region. Site-directed deletion mutagenesis was used to locate and define the enhancer and promoter elements within the LTR. In addition, we inserted exogenous DNA fragments into the LTR to examine the effects of position and sequence on the activity of these LTR transcriptional elements. The Rous sarcoma virus enhancer element, which we propose is located entirely within the LTR, was shown to activate both the beta-globin and retroviral LTR promoters when located in cis. We observed a striking correlation between the degree of activation and the distance between the retroviral promoter and enhancer elements. The LTR promoter element mediated the activation effect of the enhancer element, as LTR deletion mutants containing only the enhancer and TATA box region expressed little activity. The promoter region encoded a low but significant level of transcriptional activity even in the absence of an enhancer. Overall LTR transcriptional activity declined sharply with increasing distance between the LTR promoter and initiator elements. These results shed light on both the importance of the spatial arrangement of the sequence elements within this eucaryotic transcription control region and on the functional interrelationship between these elements.