To study the regulation of transcription of the carbamoyl-phosphate synthase (glutamine-hydrolyzing)/aspartate carbamoyltransferase/dihydroorotase (CAD) gene from the Syrian hamster, Mesocricetus auratus, we developed a homologous in vitro transcription system on the basis of nuclear extract from Syrian hamster kidney cells. We optimized the reaction temperature and the concentrations of DNA template, KCl, and MgCl2 simultaneously with the response surface method and found an unusually low temperature optimum of 20 degrees C. We therefore investigated whether CAD transcription in vitro depended on a heat-labile component of nuclear extract. Preincubating extract alone at 30 degrees C reduced transcription from the CAD promoter but not from the major late promoter of adenovirus 2. The formation of stable initiation complexes at the CAD promoter was diminished in heat-treated extract; run-off transcripts, however, accumulated at the same rate as in untreated extract. The heat sensitivity of complex formation correlated with the heat sensitivity of DNA binding by transcription factor Sp1, which binds to two sites in the CAD promoter; moreover, both preformed initiation complexes and DNA-bound Sp1 were heat-resistant. Adding purified Sp1 to heat-treated extract restored complex formation. We propose that Sp1 activates CAD transcription by stabilizing initiation complexes at the CAD promoter.