Non-coding DNA segments that are conserved between the human and mouse genomic sequence are good indicators of possible regulatory sequences. Here we report on a systematic approach to delineate such conserved elements from upstream regions of orthologous gene pairs from man and mouse. We focus on orthologous genes in order to maximize our chances to find functionally similar regulatory elements. The identification of conserved elements is effected using the Waterman-Eggert local suboptimal alignment algorithm. We have modified an implementation of this algorithm such that it integrates the determination of statistical significance for the local suboptimal alignments. This has the effect of outputting a dynamically determined number of suboptimal alignments that are deemed statistically significant. Comparison with experimentally determined annotation shows a striking enrichement of regulatory sites among the conserved regions. Furthermore, the conserved regions tend to cover the promotor region described in the EPD database.