Fibroblast growth factor-8 (FGF8) plays a critical role in vertebrate development and is expressed normally in temporally and spatially restricted regions of the vertebrate embryo. We now report on the identification of regions of Fgf8 important for its transcriptional regulation in murine ES cell-derived embryoid bodies. Stable transfection of ES cells, using a human growth hormone reporter gene, was employed to identify regions of the Fgf8 gene with promoter/enhancer activity. A 2-kilobase 5' region of Fgf8 was shown to contain promoter activity. A 0.8-kilobase fragment derived from the large intron of Fgf8 was found to enhance human growth hormone expressed from the Fgf8 promoter 3-4-fold in an orientation dependent manner. The intronic fragment contains DNA-binding sites for the AP2, Pbx1, and Engrailed transcription factors. Gel shift and Western blot experiments documented the presence of these transcription factors in nuclear extracts from ES cell embryoid bodies. In vitro mutagenesis of the Engrailed or Pbx1 site demonstrated that these sites modulate the activity of the intronic fragment. In addition, in vitro mutagenesis of both Engrailed and Pbx1 sites indicated that other unidentified sites are responsible for the transcriptional enhancement observed with the intronic fragment.