Transcriptional regulation in mammalian and plant cells is distinguished from fungi by the presence of blocks of multiple interacting DNA binding sites distributed over a relatively large upstream region of genes and the ability to use glutamine-rich enhancers such as Sp1. We offer evidence that the haploid yeast Cryptococcus neoformans contains a virulence gene, CNLAC1, having regulatory properties more similar to mammalian systems than to that of yeast. We used a novel promoter plasmid, pVEW, and electromobility shift assay techniques adapted for the fungus for the first systematic structural and functional study of a 5'-enhancer region of a basidiomycete fungus using the upstream region of CNLAC1. Two groups of interactive enhancer regions, located over a range of 1.5kb from the mRNA start site are involved in CNLAC1 regulation (region 2: -1721 to -1615 and region 7) in addition to a TATA promoter at position -539. Region 2 contains a consensus Sp1 site and region 7 contains a consensus E2F site, each of which shows significant binding to nuclear proteins under derepressed conditions; cooperative binding was also suggested between DNA-binding protein of these sites and those binding nearby CCAAT sequences in each region. Two regions of repression were also evident under derepressed conditions (region 5: -1351 to -1207 and region 8: -991 to -971). Identification of functional Sp1 binding sites and the presence of multiple interactive enhancer sites over a fairly large upstream range suggests that cryptococcal transcriptional regulation contains features often associated with higher eukaryotic regulation. C. neoformans thus may provide a unique system for the study of certain aspects of higher eukaryotic transcription, using yeast genetic approaches. In addition, properties of basidiomycete yeast such as Cryptococcus exemplified in the present study suggest an evolutionary progression in gene regulation within fungi toward properties exhibited in the kingdoms Animalia and Plantae.