alpha-fetoprotein (AFP) gene expression occurs in the yolk sac, in the fetal liver and gut, and in the adult liver during regeneration and tumorigenesis. Two unlinked genes determine the level of AFP gene expression in adult mice: Afr1 regulates the basal level of expression in the normal adult liver, and Afr2 regulates the increase in expression during liver regeneration. It has been shown that AFP-derived transgenes, including the sequences between -1,010 and -838 bp and between -118 bp and the transcriptional start site were induced appropriately during liver regeneration and were Afr2-regulated. To assess the role of the distal sequence in gene expression during liver regeneration, a new transgene with 7.6 kilobases of 5'-flanking sequence deleted between -1,010 and -838 bp was designed. We show that this transgene was subject to characteristic AFP tissue-specific and developmental regulation, in that it was highly expressed in the yolk sac and the fetal liver and gut but not in normal adult tissues. Expression was induced in response to liver regeneration as observed for the endogenous gene. The genetic regulation of the basal level of AFP gene expression in adult liver by the Afr1 gene was undisturbed. However, transgene expression was not regulated by Afr2 during liver regeneration. Our data suggest that Afr2 regulation of AFP gene expression during liver regeneration requires the sequence between -1,010 and -838 bp and is independent of other regulatory mechanisms.