Plasmids were constructed by inserting a 557-bp or 174-bp spacer fragment of rat ribosomal (r)DNA containing an enhancer element(s) at -148 bp upstream from a cloned mouse metallothionein gene (pMT-I). Transcription of these plasmids in a fractionated nuclear extract from a rat hepatoma resulted in 5 to 20-fold stimulation of MT-I gene transcription. This enhancement occurred independent of orientation of the enhancer or its distance from the metallothionein gene promoter or in the presence of the MT-I gene enhancer, and was sensitive to low levels of alpha-amanitin. Stimulation of MT-I gene transcription under the direction of the rDNA spacer element also occurred in HeLa nuclear extract, albeit to a smaller extent. Prior incubation of the nuclear extract with the 557-bp or 174-bp fragment resulted in as much as 5- to 10-fold stimulation of MT-I gene transcription. No significant effect on MT-I gene transcription was observed following preincubation with other DNAs. Preincubation of the extract with three subfragments of the 174-bp spacer inhibited MT-I gene transcription, which suggests that the majority of the 174-bp domain is required for binding to the negative regulatory factor(s) for MT-I gene transcription and that the subfragments can only interact with the positive core promoter-binding factor. The 37-bp subfragment, which has been shown to interact with a positive rDNA trans-acting factor, could also interact with a positive polymerase II (pol II) trans-acting factor. These studies have demonstrated that the 174-bp rat rDNA spacer element containing the pol I enhancer can also modulate pol II-directed transcription.