We studied transgenic mice carrying the lacZ reporter gene linked to the erythroid-specific beta-globin promoter and beta-globin locus control region (LCR). Previously, we had demonstrated that the total level of expression of beta-galactosidase enzyme, which is the product of the lacZ gene, varies widely between different transgenic mice due to position effects at the sites of transgene integration. Here, using the X-gal based in situ assay for beta-galactosidase activity, we found that the percent erythroid cells that expressed the transgene also varied widely between the mice. Moreover, a kinetic analysis showed that the average beta-galactosidase content per expressing cell varied both between samples of different transgenic descent and between erythroid cells within each sample, demonstrating that the variable expression of this lacZ transgene was being controlled in a graded manner. These results suggest that the beta-globin LCR enhancers function through a graded model, which is described, rather than the binary mechanism that has been proposed previously for other enhancers.