I factors are LINE-like transposable elements in the genome of Drosophila melanogaster. They normally transpose infrequently but are activated in the germline of female progeny of crosses between males of a strain that contains complete elements, an I or inducer strain and females of a strain that does not, an R or reactive strain. This causes a phenomenon known as I-R hybrid dysgenesis. We have previously shown that the I factor promoter lies between nucleotides 1 and 30. Here we demonstrate that expression of this promoter is regulated by nucleotides 41-186 of the I factor. This sequence can act as an enhancer as it stimulates expression of the hsp7O promoter in ovaries in the absence of heat-shock. Within this region there is a site that is required for promoter activity and that is recognized by a sequence-specific binding protein. We propose that this protein contributes to the enhancer activity of nucleotides 41-186 and that reduced I factor expression in inducer strains is due to titration of this protein or others that interact with it.