Preadipocyte factor-1 (Pref-1) is a transmembrane epidermal growth factor-like domain-containing protein highly expressed in 3T3-L1 preadipocytes, but is undetectable in mature fat cells; this down-regulation is required for adipocyte differentiation. We show here that pref-1 transcription is markedly suppressed during adipose conversion and results in decreased Pref-1 RNA levels. Using 3T3-L1 cells stably transfected with Pref-1 5'-deletion constructs truncated at -6000, -2100, -1300, -692, -300, -235, -193, -183, -170, -93, and -45 base pairs, we determined that the -183 to -170 region is responsible for the suppression of the pref-1 gene during adipogenesis. This is distinct from the -93 to -45 sequence important for pref-1 promoter activity in preadipocytes. The placement of a 40-base pair -193 to -154 pref-1 sequence containing the putative SAD (suppression in adipocyte differentiation) element upstream of the SV40 promoter decreased promoter activity by 85% upon adipocyte differentiation, compared with 40% observed with the SV40 promoter alone. The SAD element is therefore sufficient for adipocyte differentiation-dependent down-regulation of a heterologous promoter. A DNA-protein complex was observed when the -193 to -174 sequence was used with 3T3-L1 nuclear extracts in gel mobility shift assays. Competition with oligonucleotides harboring base substitution mutations identified a core sequence of -183AAAGA-179 as crucial for DNA-protein complex formation. UV cross-linking predicts that an approximately 63-kDa protein specifically binds the SAD element.