To determine the mechanisms of cell-specific gene expression in the developing pulmonary epithelium the Clara cell secretory protein (CCSP) gene promoter was analysed by DNAase I footprinting. A prominent site of protein-DNA interaction was detected from nucleotides -132 to -76 using nuclear extract from mouse lung and human H441 cells. Mobility shift analysis revealed that an oligonucleotide corresponding to this region interacted with multiple proteins from lung and H441 cell nuclear extracts. Analysis of the nucleotide sequence of this region identified two potential binding sites for hepatocyte nuclear factor 3 (HNF-3), and consistent with this finding binding to this CCSP oligonucleotide was specifically competed for by an oligonucleotide corresponding to the HNF-3-binding site from the mouse transthyretin gene. Mobility shift of the CCSP oligonucleotide was supershifted using antisera specific to HNF-3 alpha and HNF-3 beta, and HNF-3 alpha and HNF-3 beta translated in vitro were found to bind specifically to this same oligonucleotide. Co-transfection of HNF-3 alpha- and HNF-3 beta-expression plasmids increased cell-specific reporter gene activity in H441 cells transfected with a CCSP-CAT gene chimeric construct containing this -132 to -76 region. Taken together, these results suggest a role for HNF-3 in mediating cell-specific CCSP gene expression within the bronchiolar epithelium. These findings support the hypothesis that members of the HNF-3 'forkhead' family of transcription factors determine gene expression and cell fate in multiple cell lineages derived from the primitive gut endoderm.