The function of the gene encoding human 17beta-hydroxysteroid dehydrogenase (17HSD) type 1, the hHSD17B1 gene, is regulated by a cell-specific enhancer at position -662 to -392. The adjacent hHSD17BP1 gene, whose function is not known, contains an analogous region in its 5'-flanking region. The identity between the hHSD17B1 enhancer and the hHSD17BP1 equivalent is as high as 98%, i.e. they differ by only five nucleotides. Results from reporter gene analyses showed that the hHSD17BP1 analog, a pseudoenhancer, has only 10% the activity of the hHSD17B1 enhancer. Furthermore, the results indicate that the reduced function of the pseudoenhancer is a consequence of the presence of G and A at positions -480 and -486, whereas the hHSD17B1 enhancer contains -480C and -486G. In addition, three protected areas were localized to regions -495/-485 (FP1), -544/-528 (FP2), and -589/-571 (FP3) in deoxyribonuclease I footprinting analysis of the hHSD17B1 enhancer. Replacement of the footprinted regions with a nonsense sequence demonstrated that the FP2 region is the most critical for enhancer activity. Mutations of FP2 or a short palindromic region within it led to almost complete abolishment of enhancer activity. We have identified several subelements that are essential for appropriate function of the hHSD17B1 enhancer. The results also show that the hHSD17B1 and hHSD17BP1 genes operate differently despite the high homology between them.