The rat gene encoding phenylethanolamine N-methyltransferase (PNMT) was cloned and a consensus sequence for a glucocorticoid response element (GRE) was found at -513 bp, 5' to the transcriptional start site. In order to define the function of this element, fusion genes containing the PNMT promoter and a chloramphenicol acetyltransferase (CAT) reporter gene were constructed. These constructs did not express after transfection into any of 7 continuous cell lines, none of which endogenously produce PNMT. A system for transfecting chromaffin cells in primary culture was therefore devised using constructs containing 200 bp of the proenkephalin (ENK) promoter, whose expression characteristics are well known. pENK beta GAL-1, containing the ENK promoter with a lac Z reporter, was introduced into these cells and beta-galactosidase activity was visualized in situ. Approximately 90% of cells transfected were chromaffin; transfection efficiency was 5%. High levels of CAT activity were measured in chromaffin cells transfected with pENKAT12, possessing a CAT reporter. In contrast to tumor cell lines, pENKAT12 induction in these cells by forskolin and phorbol esters did not require a phosphodiesterase inhibitor. In this chromaffin system, both basal and regulated expression of the PNMT fusion genes were detected. Dexamethasone (dex) induced expression of pPNMT3000 and pPNMT900, containing the putative GRE and 3000 bp or 863 bp of PNMT promoter sequence, 4- to 10-fold. Expression of pPNMT300 and pPNMT100, which lack the GRE and contain 273 bp or 99 bp of PNMT promoter sequence, was unaffected by dex. Addition of the PNMT region spanning -490 to -863 bp conferred full dex responsiveness to a thymidine kinase promoter. Deletion of the putative GRE sequence by site-directed mutagenesis abolished the dex response. These data identify the sequence at -513 bp in the rat PNMT gene as a functional, positively acting GRE. Primary cultures of bovine chromaffin cells provide a biologically relevant expression system for transcriptional studies of catecholamine genes and their related neuropeptides.