A putative adipocyte-specific enhancer has been mapped to approximately 1 kilobase pair upstream of the cytosolic phosphoenolpyruvate carboxykinase (PEPCK) gene. In the present study, we used transgenic mice to identify and characterize the 413-base pair (bp) region between -1242 and -828 bp as a bona fide adipocyte-specific enhancer in vivo. This enhancer functioned most efficiently in the context of the PEPCK promoter. The nuclear receptors peroxisome proliferator-activated receptor gamma (PPARgamma) and 9-cis-retinoic acid receptor (RXR) are required for enhancer function in vivo because: 1) a 3-bp mutation in the PPARgamma-/RXR-binding element centered at -992 bp, PCK2, completely abolished transgene expression in adipose tissue; and 2) electrophoretic mobility supershift experiments with specific antibodies indicated that PPARgamma and RXR are the only factors in adipocyte nuclear extracts which bind PCK2. In contrast, a second PPARgamma/RXR-binding element centered at -446 bp, PCK1, is not involved in adipocyte specificity because inactivation of this site did not affect transgene expression. Moreover, electrophoretic mobility shift experiments indicated that, unlike PCK2, PCK1 is not selective for PPARgamma/RXR binding. To characterize the enhancer further, the rat and human PEPCK 5'-flanking DNA sequences were compared by computer and found to have significant similarities in the enhancer region. This high level of conservation suggests that additional transcription factors are probably involved in enhancer function. A putative human PCK2 element was identified by this sequence comparison. The human and rat PCK2 elements bound PPARgamma/RXR with the same affinities. This work provides the first in vivo evidence that the binding of PPARgamma to its target sequences is absolutely required for adipocyte-specific gene expression.