The expression of the gene coding for chromosomal protein HMG-17 is down regulated during chicken erythrocyte maturation. The transcriptional down regulation is associated with major alterations in the chromatin structure of this gene. The 5' region of the gene contains both constitutive and developmental stage-specific deoxyribonuclease I (DNase I) hypersensitive sites. The constitutive sites bracket the "CpG island" present in the gene, which remains hypomethylated throughout the various developmental stages. During erythropoiesis, the gene acquires a distinct structure that, upon digestion with micrococcal nuclease (MNase) yields an unusual repeat. Two nucleosomes, with a 200 base-pair repeat, are positioned immediately downstream from the start of transcription. Immediately downstream and upstream from these nucleosomes, the boundaries between MNase sites change to a 75 base-pair repeat, which indicates an unusual chromatin structure. The differentiation related changes in the DNase I and MNase digestion pattern in the 5' region of the gene suggest that sequences present in the first intron may be involved in gene regulation. The results may be relevant to the regulation of the entire HMG-14/-17 gene family.