The woodchuck intronless proto-oncogene N-myc2 was initially discovered as a frequent target site for hepadnavirus integration in hepatocellular carcinoma. N-myc2 possesses characteristics of a functional retroposon derived from the woodchuck N-myc gene. We have investigated the regulatory signals governing N-myc2 expression and found that a short promoter, including a variant TATA box and potential binding sites for several transcription factors, is localized in the N-myc2 sequences homologous to the 5' untranslated region of the second N-myc exon. The corresponding region in the intron-containing woodchuck N-myc gene also exhibited promoter activity in transient transfection assays. The high evolutionary conservation of these sequences in mammalian N-myc genes suggests that they contain a cryptic N-myc promoter which may be unmasked in the particular context provided by the N-myc2 retroposon. Although N-myc2, like the woodchuck N-myc gene, contributes to an extended CpG island and was found constitutively hypomethylated, it presents a highly restricted expression pattern in adult animals. Whereas the intron-containing N-myc gene is expressed at low levels in different tissues, N-myc2 mRNA was detected only in brain tissue, raising questions about the functional significance of the maintenance of a second N-myc gene in the woodchuck genome.