The majority of the human Ig heavy chain (IgH) constant (C) region locus has been cloned and mapped. An exception is the region between C delta and C gamma 3, which is unstable and may be a recombination hot spot. We isolated a pBAC clone (pHuIgH3'delta-gamma 3) that established a 52-kb distance between C delta and C gamma 3. Sequence analysis identified a high number of repeat elements, explaining the instability of the region, and an unusually large accumulation of transcription factor-binding motifs, for both lymphocyte-specific and ubiquitous transcription activators (IKAROS, E47, Oct-1, USF, Myc/Max), and for factors that may repress transcription (Delta EF1, Gfi-1, E4BP4, C/EBP beta). Functional analysis in reporter gene assays revealed the importance of the C delta-C gamma 3 interval in lymphocyte differentiation and identified independent regions capable of either enhancement or silencing of reporter gene expression and interaction with the IgH intron enhancer E mu. In transgenic mice, carrying a construct that links the beta-globin reporter to the novel delta-gamma 3 intron enhancer (E delta-gamma 3), transgene transcription is exclusively found in bone marrow B cells from the early stage when IgH rearrangement is initiated up to the successful completion of H and L locus recombination, resulting in Ab expression. These findings suggest that the C delta-C gamma 3 interval exerts regulatory control on Ig gene activation and expression during early lymphoid development.