CCAAT/enhancer-binding proteins (C/EBPs) are key transcription factors involved in the constitutive expression of several cytochrome P450 genes in the liver. Their concentration and activity change in several pathophysiological conditions. For instance, during inflammation, released cytokines induce repressive C/EBPbeta-liver inhibitory protein (LIP), which antagonizes constitutive C/EBP transactivators [C/EBPalpha and C/EBPbeta-liver activating protein (LAP)], down-regulating genes such as CYP3A4. However, the mechanism by which hepatic C/EBP factors modulate transcription of the CYP3A4 gene is not known. To elucidate the mechanism of action, we cotransfected luciferase reporter vectors, containing 5'-flanking deletions of the CYP3A4 gene, along with expression vectors for C/EBPbeta-LAP, C/EBPbeta-LIP, and C/EBPalpha, in hepatic (HepG2) and nonhepatic (HeLa) cells. Analysis of the -3557 to -6954 base pair (bp) region demonstrated the existence of a 288-bp sequence at -5.95 kilobases (kb), which showed maximal response to C/EBPbeta-LAP ( approximately 30-fold increase in HepG2 cells). Coexpression of LAP with increasing amounts of LIP reduced the activating effect by approximately 70%. Site-directed mutagenesis of predicted C/EBPbeta binding sites demonstrated the presence of four functional C/EBPbeta-responsive motifs within this distal flanking region. Further experiments using chromatin immunoprecipitation proved the binding of endogenous C/EBPbeta to the -5.95-kilobase enhancer of the CYP3A4 gene in human hepatocytes. Expression of recombinant LAP and LIP by means of adenoviral vectors resulted in their binding to this region, which was followed by activation/repression of CYP3A4. Together, our results uncover a new distal enhancer site in the CYP3A4 gene where C/EBPbeta-LAP binds and activates transcription, whereas the truncated form, C/EBPbeta-LIP, antagonizes LAP activity and causes gene repression.