Class II genes of the MHC show a striking homology upstream of the transcription start site that is composed of three conserved sequences (S, X and Y boxes, each separated by 15–20 bp). The presence of the S-box sequence in the mouse MHC class II gene I-Aβ was examined for its influence on the expression of this gene. Deletion or mutation of the S box decreased the induction of chloramphenicol acetyltransferase (CAT) activity in B lymphocytes by 32%. In macrophages, deletion or mutation of the S box abolished interferon-γ (IFN-γ) inducibility of CAT activity. Using a gel-retardation assay, we have identified a nuclear factor whose binding site overlaps the 7-mer conserved sequence of the S box. This factor is present in lymphocytes, macrophages, mastocytes and fibroblasts. Surprisingly, binding of this nuclear factor to DNA was induced by IFN-γ in bone-marrow-derived macrophages, but not in macrophage-like cell lines. The binding site for this factor was defined by DNase I footprinting and partially purified by using an affinity column containing double-stranded oligonucleotides containing a sequence of the S box. A prominent protein of 43 kDa was found that bound specifically to the S-box sequence.