PAX6 is a transcription factor that plays a major role in ocular morphogenesis. PAX6 is expressed in the eye, central nervous system and pancreas. Two alternative promoters, P0 and P1, which are differentially regulated during development, drive PAX6 transcription. We identified a 57 bp cis-regulatory element in exon 1 of the human PAX6 gene exon 1 enhancer (EIE). EIE enhances P1-driven PAX6 expression. Three regions in E1E (E1E-1, E1E-2 and E1E-3) have sequence similarities with binding sites of transcription factors ARP-1, Isl-1 and SEF, respectively. As shown by electrophoretic mobility shift assays, E1E-3, but not E1E-1 or E1E-2, bound to proteins in nuclear extracts of human glioma cells and transcription factor SEF bound to E1E-3. As shown by transient transfection experiments, deletion or site-specific mutations in E1E-3 dramatically decreased P1 promoter activity. Mutations in E1E-2, however, did not affect function of the P1 promoter. Co-transfection of SEF and PAX6 promoter-reporter constructs showed that SEF up-regulates PAX6 gene expression through the P1 promoter. Two Sp1 sites in the E1E region were also shown to be important by transient co-transfection assays. Data from immunoprecipitation and transient transfection assays demonstrated that SEF and Sp1 interacted in vitro and may act together in vivo to regulate PAX6 expression.