We have constructed hybrid dihydrofolate reductase (DHFR) genes which are controlled by the sterol-responsive hamster 3-hydroxy-3-methylglutaryl coenzyme A (HMG CoA) reductase promoter. Stable transfection frequencies of these chimeric templates into a DHFR-deficient Chinese hamster cell line indicate that the HMG CoA reductase promoter fragment confers DHFR transformation irrespective of its orientation relative to a downstream murine DHFR cDNA. Sterol-regulated levels of DHFR RNA and protein are detected from hybrid genes which carry a properly oriented promoter fragment. Constructions which invert this HMG CoA reductase promoter, however, generate DHFR RNA levels which do not respond to sterols. In the context of these transfected fusion genes, we present evidence of divergent opposite-strand transcription initiating from the HMG CoA reductase 5' fragment. In contrast, the endogenous HMG CoA reductase promoter region shows no apparent evidence of such bidirectional activity.