The Drosophila mats gene plays a critical role in growth control. Using molecular genetic approaches we investigated how mats is regulated in development. A 2236-bp genomic sequence that contains entire mats including upstream and downstream intergenic regions can rescue mats mutant phenotypes, indicating that regulatory elements necessary for proper mats expression are mostly retained. However, constructs without the upstream or downstream intergenic region failed to rescue mats mutants, demonstrating the functional importance of these sequences. Moreover, mats expression is reduced in mats(e17), a mats allele with over one-third of the downstream intergenic region deleted. Consistent with a model that the downstream intergenic region is critical for mats activity, this sequence contains evolutionarily conserved elements and has enhancer activities.