Transcription of the gene coding for tryptophan oxygenase (TO) in rat liver is induced 10-fold by glucocorticoids. To identify DNA elements mediating the glucocorticoid-regulated expression of the TO gene we transfected mouse L cells with a fusion gene consisting of 1.95 kb TO 5'-flanking sequences linked to the coding sequence of the gene for chloramphenicol acetyltransferase (CAT). CAT assay and RNA mapping experiments demonstrate that both transient and stable expression of the TO-CAT fusion gene are inducible by dexamethasone. Analysis of transcripts from 5'-deletion mutants identifies two glucocorticoid-responsive elements (GRE), located 450 bp and 1.2 kb upstream of the cap site. The purified rat glucocorticoid receptor binds to the sequence of each GRE as evidenced from footprinting experiments. Interestingly the protected sequence of the proximal footprint is by itself not sufficient for sequence induction, but requires sequences located immediately upstream.