The rat D2 dopamine receptor gene is transcribed from a TATA-less promoter that has an initiator-like sequence and several putative Sp1 binding sites. The main activator of this gene is between nucleotides -75 and -29, and a strong negative modulator is located between bases -217 and -76 (Minowa, T., Minowa, M. T., and Mouradian, M. M. (1992) Biochemistry 31, 8389-8396). In the present investigation, a small deletion series within this negative modulator fused with the reporter gene for chloramphenicol acetyltransferase was used to transfect the D2-expressing cells, NB41A3. Two cis-acting functional DNA sequences were identified: a 41-base pair segment between nucleotides -116 and -76 (D2Neg-B), which decreased transcription from the D2 promoter by about 45%, and a 26-base pair segment between nucleotides -160 and -135 (D2Neg-A), which, in the presence of the downstream negative modulator, reduced transcription down to the level of a promoterless vector. DNase I footprinting, gel mobility shift, and competitive cotransfection experiments suggested that D2Neg-A functions without trans-acting factors, whereas D2Neg-B interacts with nuclear factors at its Sp1 binding sequences. Gel supershift with anti-Sp1 antibody and UV cross-linking experiments revealed that a novel 130-kDa factor as well as Sp1 interact with D2Neg-B in NB41A3 cells. This novel protein recognizing Sp1 binding sequences in the D2 gene negative modulator is also found in nuclear extract from the rat striatum.