Large-scale cross-species DNA sequence comparison has become a powerful tool to identify conserved cis-regulatory modules of genes. However, bioinformatic analysis alone cannot reveal how an evolutionarily conserved region regulates gene expression: whether it functions as an enhancer, silencer, or insulator; whether its function is cell-type restricted; and whether biologically relevant transcription factors bind to the element. Here we combine bioinformatics with wet-lab techniques to illustrate a general and systematic method of identifying functional conserved regulatory regions of genes. We applied this approach to the interferon-gamma (IFN-gamma) gene. Comparison of human and mouse IFN-gamma reveals a highly conserved non-coding sequence located approximately 5 kb 5' of the transcription start site. This region coincides with constitutive and inducible DNase I hypersensitivity sites present in IFN-gamma-producing Th1 cells but not in Th2 cells that do not produce IFN-gamma. Histone methylation at the 5' conserved non-coding sequences indicates a more accessible chromatin structure in Th1 cells compared with Th2 cells. This element binds two transcription factors known to be essential for IFN-gamma expression: nuclear factor of activated T cells, an inducible transcription factor, and T-box protein expressed in T cells, a cell lineage-restricted transcription factor. Together, these findings identify a highly conserved distal enhancer in the IFN-gamma cytokine locus and validate our approach as a successful method to detect cis-regulatory elements.