The helix-loop-helix (HLH) Id proteins have been reported to function as inhibitors of various differentiation programs. The HLH motif mediates dimer formation between Id and the basic HLH transcription factors. Since Id proteins lack the basic region responsible for DNA binding, the heterodimers cannot bind to DNA. Id proteins have also been found to be involved in early B-cell differentiation. They are expressed at high levels in progenitor B cells (pro-B cells), and the expression is diminished in pre-B cells and mature B cells. This expression pattern correlates inversely with basic HLH protein activity and immunoglobulin enhancer function in B-cell development. Regulation of Id expression may play an important role in transcriptional control of immunoglobulin genes and therefore in B-cell differentiation. We have characterized the regulatory elements of the Id1 gene. Using stable transfectants, transient transfection, and mobility shift assays, we have identified an 8-bp element designated PBE (pro-B enhancer) downstream of the Id1 gene that is responsible for a pro-B-cell-specific enhancer activity. A pro-B-cell-specific protein complex was found to bind to the 8-bp PBE element. Substitution mutagenesis at this binding site showed that it is indeed of functional importance in regulating the pro-B-cell-specific expression of the Id1 gene.