The human salivary amylase genes are associated with two inserted elements, a gamma-actin-processed pseudogene and an endogenous retroviral-like element. To test the contribution of these inserted elements to tissue specificity, 25 lines of transgenic mice carrying 10 amylase constructs were established. A 1-kb fragment of AMY1C (-1003 to +2) was found to be sufficient for parotid-specific expression of a human growth hormone reporter gene. The 1-kb fragment is entirely derived from inserted sequences. Deletion from -1003 to -826 resulted in reduced levels of transgene expression and loss of tissue specificity. The fragment -1003 to -327 was sufficient to transfer parotid specificity to the thymidine kinase promoter. The data demonstrate that the functional tissue-specific promoter of human AMY1C is derived from inserted sequences and that parotid expression can be conferred by sequences derived solely from the retrovirus. A role for retrotransposition in the evolution of gene regulation is indicated by these and other recent observations.