The intestinal epithelium is characterized by the rapid and continuous renewal of its four principal cell types and by its ability to establish and maintain remarkably complex spatial differentiation along its crypt-to-villus and duodenal-to-colonic axes. We have previously used transgenic mice containing liver fatty acid binding protein/human growth hormone (L-FABP/hGH) fusion genes to analyze the molecular mechanisms responsible for encoding positional information in this epithelium. Because these studies could not distinguish whether cis-acting sequences in the L-FABP promoter or hGH structural gene were responsible for the observed cellular and regional patterns of transgene transcription in the gut, a second model fusion gene has now been constructed. It consists of nucleotides -596 to +21 of rat L-FABP linked to a cDNA encoding a chimeric protein, human decay-accelerating factor (DAF, minus the site of attachment of its COOH-terminal glycophospholipid anchor), coupled to the transmembrane (TM) and cytoplasmic domains of human HLA-B44. RNA blot hybridization and immunocytochemical analyses revealed that the cell-specific and region-specific expressions of DAF-TM and hGH in adult mice appear identical along both axes of the gut, indicating that cis-acting elements contained within the 5' nontranscribed region of the L-FABP gene rather than in the reporter are largely responsible for these observed patterns of transgene expression. Unlike pre-hGH, a prototypical secreted protein, DAF-TM is a membrane protein. The ability to direct its expression along the length of both axes of the gut provides an opportunity to analyze in vivo the sorting pathways of membrane-associated proteins in normal epithelial cells as a function of their location and differentiation. Light microscopic studies indicate that DAF-TM is targeted to the basolateral and apical surfaces of villus-associated enterocytes.