The cAMP response element (CRE) mediates cAMP responsiveness in many eukaryotic genes (Roesler, W. J., Vandenbark, G. R., and Hansen, R. W. (1988) J. Biol. Chem. 263, 9063-9066). The tyrosine hydroxylase gene (TH) contains a single copy of a consensus CRE at -45 to -38 base pair (bp) upstream of the transcription initiation site. Deletional and mutational analyses of the upstream 2400-base pair region of the rat TH gene using transient transfection assay demonstrated that the CRE was essential for both cAMP-mediated induction and basal transcription of the TH gene. Another domain between -365 and -151 bp, containing the AP1 site, contributed to transcription to a smaller degree. Thus, the CRE appears to play an important dual role as a basal promoter element and an inducible enhancer for TH transcription. Interactions between the DNA binding factors in nuclear extract and CRE-containing oligonucleotides were investigated by gel retardation and competition assays. Oligonucleotides corresponding to the CRE regions of the TH or somatostatin gene gave rise to a pair of distinct protein-DNA complexes with identical mobilities in the gel retardation assay, suggesting that similar nuclear factor(s) might bind to the CREs of the TH and somatostatin genes. This study emphasizes a fundamental role of the CRE in transcriptional activation of the TH gene in catecholaminergic cells.