As a unique nuclear receptor with only ligand-binding but no DNA-binding domain, small heterodimer partner (SHP) interacts with many transcription factors to inhibit their function. However, the regulation of SHP expression is not well understood. SHP is highly expressed in the liver, and previous studies have shown farnesoid X receptor (FXR) highly induces SHP by binding to a FXR response element (FXRRE) in the promoter of the Nr0b2 gene, which encodes SHP. The FXR-SHP pathway is critical in maintaining bile acid and fatty acid homeostasis. After genome-wide FXR binding by chromatin immunoprecipitation (ChIP) coupled to massively parallel sequencing (ChIP-seq), a novel FXRRE was found in the 3′-enhancer region of the Nr0b2 gene. This downstream inverted repeat separated by one nucleotide is highly conserved throughout mammalian species. We hypothesized that this downstream FXRRE is functional and may mediate a head-to-tail chromatin looping by interacting with the proximal promoter FRXRE to increase SHP transcription efficiency. In the current study, a ChIP-quantitative PCR assay revealed FXR strongly bound to this downstream FXRRE in mouse livers. The downstream FXRRE is important for FXR-mediated transcriptional activation revealed by luciferase gene transcription activation, as well as by deletion and site-directed mutagenesis. The chromatin conformation capture assay was used to detect chromatin looping, and the result confirmed the two FXRREs located in the Nr0b2 promoter and downstream enhancer interacted to form a head-to-tail chromatin loop. To date, the head-to-tail chromatin looping has not been reported in the liver. In conclusion, our results suggest a mechanism by which activation of FXR efficiently induces SHP transcription is through head-to-tail chromatin looping.