Milk protein gene expression is regulated by the synergistic interactions of several lactogenic hormones, including insulin, PRL, and glucocorticoids. Whey acidic protein (WAP) gene expression is highly dependent on glucocorticoids, and to a lesser extent than casein gene expression, on the presence of PRL. Previous studies have demonstrated that a distal DNase I hypersensitive site in the rat WAP gene 5'-flanking region containing several binding sites for nuclear factor I is required for high level WAP gene expression in transgenic mice. In this study several specific glucocorticoid receptor (GR) binding sites were identified flanking these nuclear factor I sites using an in vitro DNase I footprinting assay with baculovirus-expressed GR. These sites were able to confer dexamethasone inducibility to a heterologous thymidine kinase-chloramphenicol acetyltransferase reporter gene construct in transient cotransfection experiments with GR in CV1 cells. Administration of dexamethasone to adrenal-ectomized mice carrying the +2020 rat WAP transgene during lactation demonstrated that glucocorticoids are required to maintain transgene expression in the mammary gland. Furthermore, glucocorticoid-induced changes in transgene expression were correlated with the appearance of DNase I hypersensitive sites. These results indicate that at least part of glucocorticoid regulation of WAP gene expression is mediated through the direct interaction of GR with glucocorticoid response elements in the distal promoter region resulting in steroid hormone-dependent alterations in chromatin structure.