A total of 134 base pairs of the 5' flanking sequence of the elastase I gene is sufficient and necessary to direct expression of the passive human growth hormone gene (hGH) to the exocrine pancreas. We demonstrate that this elastase I regulatory region contains a transcriptional enhancer which directs acinar cell-specific expression in transgenic animals. The elastase I enhancer specifies correct expression of the linked hGH gene in an orientation- and position-independent manner and can activate a heterologous promoter. The enhancer also directs the appropriate temporal activation of the hGH gene in the developing pancreas. Transcription is initiated correctly for the elastase I or hGH promoter, and the transcripts are correctly processed regardless of the enhancer position within or outside the fusion gene. The elastase I enhancer generates coincident DNase I-hypersensitive sites in pancreatic chromatin when moved 3 kilobases upstream or within the first intron of the hGH gene and when associated with the hGH promoter.