The transcription of the Drosophila melanogaster 68C salivary gland glue gene Sgs-3 involves the interaction of a distal and a proximal regulatory region. These are marked in vivo by a specific chromatin structure which is established sequentially during development, starting early in embryogenesis. The distal region is characterized by a stage- and tissue-specific DNase I hypersensitive site. A stage- and tissue-specific factor, GEBF-I, binds in this region and is missing in 2B5 mutant larvae which lack Sgs-3 transcripts. This binding involves the simultaneous interaction with two distinct DNA sequences which induces conformational changes in the protein. Salivary glands acquire competence to respond to ecdysone in the mid-third larval instar, whereafter the hormone rapidly induces both the GEBF-I protein and Sgs-3 transcription.