Expression of a transgene containing 2.25 kb of the 5' flanking region of the rat Clara cell secretory protein gene and the human growth hormone gene was examined in developing mice. Despite an absolute preservation of tissue specificity based on RNA blot analysis, transgene-specific transcripts were detectable as early as 12.5 days of gestation, at least 4 days prior to endogenous Clara cell secretory protein gene expression. As differentiation proceeded, in situ hybridization revealed an increasingly restricted pattern of transgene expression in the developing pulmonary epithelium, such that by day 16.5 of gestation endogenous and transgene expression were confined to identical cells within the bronchiolar epithelium. The temporal discordance in transgene expression suggests the presence of unique cis-acting elements within the Clara cell secretory protein gene, not present in the transgene, which transduce developmental timing within pulmonary epithelium by actively repressing Clara cell secretory protein gene expression during early development. The unique expression of this transgene serves as a lineage marker in the respiratory epithelium and unmasks a temporal and spatial pattern of gene expression not observed in any pulmonary genes.