The peripherin gene, which encodes a neuronal-specific intermediate filament protein, is transcriptionally induced with a late time course when nerve growth factor (NGF) stimulates PC12 cells to differentiate into neurons. We have studied its transcriptional regulation in order to better understand the neuronal-specific end steps of the signal transduction pathway of NGF. By 5' deletion mapping of the peripherin promoter, we have localized two positive regulatory elements necessary for full induction by NGF: a distal positive element and a proximal constitutive element within 111 bp of the transcriptional start site. In addition, there is a negative regulatory element (NRE; -179 to -111), the deletion of which results in elevated basal expression of the gene. Methylation interference footprinting of the NRE defined a unique sequence, GGCAGGGCGCC, as the binding site for proteins present in nuclear extracts from both undifferentiated and differentiated PC12 cells. However, DNA mobility shift assays using an oligonucleotide probe containing the footprinted sequence demonstrate a prominent retarded complex in extracts from undifferentiated PC12 cells which migrates with slower mobility than do the complexes produced by using differentiated PC12 cell extract. Transfection experiments using peripherin-chloramphenicol acetyltransferase constructs in which the footprinted sequence has been mutated confirm that the NRE has a functional, though not exclusive, role in repressing peripherin expression in undifferentiated and nonneuronal cells. We propose a two-step model of activation of peripherin by NGF in which dissociation of a repressor from the protein complex at the NRE, coupled with a positive signal from the distal positive element, results in depression of the gene.