Plasmids containing the VA RNA genes of adenovirus are faithfully transcribed by a crude cytoplasmic extract containing DNA-dependent RNA polymerase III [Wu, G.-J. (1978) Proc. Natl. Acad. Sci. USA 75, 2175-2179]. By subjecting these DNA templates to in vitro site-directed mutagenesis with a novel enzyme of Pseudomonas and recloning in pBR322, we have constructed an ordered series of deletions which affect the in vitro transcription of the major RNA polymerase III viral product, VAI RNA. Three regions that are required for specific synthesis of VAI RNA can be defined. One, inside the gene at nucleotides +10 to +76, affects the transcription in an all-or-none fashion. Transcription is initiated on plasmid sequences that replace up to 10 nucleotides downstream from the 5' end of the gene. Variants with deletions past nucleotide +15 do not support the transcription of VAI RNA. Removal of 3'-end sequences downstream from +76 allows correct initiation. A second region, upstream from the initiation site, affects the exact alignment of the first nucleotide of the transcript [Thimmapaya, B., Jones, N. & Shenk, T. (1979) Cell 18, 947-959]. A third region, downstream from +76, encodes signals for termination of transcription, and new signals were brought in with other viral DNA sequences. Transcription competition experiments indicate that the primary site for binding of a transcriptional regulation factor is located between nucleotides +55 and +70 and suggest that the control region is bifunctional. An internal control region for VAI RNA, approximately 60 bases long and 11 bases downstream from the 5' end of the gene, can be defined.