A cDNA clone for cytochrome P-450e, a phenobarbitone-inducible species in rat liver, has been isolated and characterized. With the use of this cloned DNA, an attempt has been initiated to elucidate the factors regulating the cytochrome P-450 gene expression. Inhibitors of heme synthesis such as cobalt chloride and 3-amino-1,2,4-triazole block the induction of cytochrome P-450e by phenobarbitone at the level of transcription. This is evident from the decrease in the rate of synthesis of cytochrome P-450e, a decrease in the levels of specific translatable messenger RNA, a decrease in the specific cytoplasmic and nuclear messenger RNA contents, and nuclear transcription of cytochrome P-450e gene, as revealed by hybridization to the cloned probe, under these conditions. It is proposed that heme is a general regulator of cytochrome P-450 gene expression at the level of transcription, whereas the drug or its metabolite would impart the specificity needed for the induction of a particular species.