Prepro-orexin is a precursor of the neuropeptides orexin-A and -B, which are localized in the neuronal population of the lateral hypothalamic area (LHA). We wished to elucidate the mechanisms by which the prepro-orexin gene is specifically activated in orexin neurons in the LHA. The 3.2-kb 5'-flanking region of the human prepro-orexin gene is sufficient for the specific expression of an Escherichia coli lacZ reporter gene in orexin neurons. Therefore, we examined a series of reporter constructs harboring this 3.2-kb regulatory region or its deletion in a reporter transgenic mouse assay. There are two phylogenetically conserved regions located 287 bp (orexin regulatory element (OE) 1) and 2.5 kb (OE2) upstream of the transcription initiation site of the human prepro-orexin gene. In transgenic mice, both OE1 and OE2 are necessary for expressing the human prepro-orexin gene in the LHA and for repressing its expression in the medial regions of the hypothalamus. Through serial deletion analysis of OE1, we found that the 57-bp core region of OE1 is critical for its spatial gene regulatory function in vivo. Mutation analysis further demonstrated that without contribution from the OE1 core region, the lacZ reporter is expressed ectopically in the medial regions of the hypothalamus. Thus, OE1 contains crucial cis-acting elements regulating prepro-orexin gene expression specifically in the LHA.