The 5'-flanking region of the rat prolactin gene contains two DNase I-hypersensitive (HS) sites. We used gene transfer experiments to determine the nucleotide (nt) sequences within and around these two HS sites that may contain the information necessary for regulation of prolactin gene expression by estrogens and glucocorticoids. A chimeric gene construct (pPRL.CAT) was prepared by covalently linking the sequence of the rat prolactin gene to the bacterial chloramphenicol acetyltransferase-coding gene, cat. Rat GH3 cells were transfected with pPRL.CAT and six mutants that possess deletions within and around the two HS sites. Incubation of such transfectants with estrogen or dexamethasone indicated the existence of two functionally important elements within the 5'-flanking region of the rat prolactin gene. The element required for estrogen up-regulation of the prolactin gene is located between nt residues -1530 through -1950. The glucocorticoid down-regulatory element is located between nt -200 and +75.