The molecular basis of adipocyte-specific gene expression is not well understood. We have previously identified a 518-bp enhancer from the adipocyte P2 gene that stimulates adipose-specific gene expression in both cultured cells and transgenic mice. In this analysis of the enhancer, we have defined and characterized a 122-bp DNA fragment that directs differentiation-dependent gene expression in cultured preadipocytes and adipocytes. Several cis-acting elements have been identified and shown by mutational analysis to be important for full enhancer activity. One pair of sequences, ARE2 and ARE4, binds a nuclear factor (ARF2) present in extracts derived from many cell types. Multiple copies of these elements stimulate gene expression from a minimal promoter in preadipocytes, adipocytes, and several other cultured cell lines. A second pair of elements, ARE6 and ARE7, binds a separate factor (ARF6) that is detected only in nuclear extracts derived from adipocytes. The ability of multimers of ARE6 or ARE7 to stimulate promoter activity is strictly adipocyte specific. Mutations in the ARE6 sequence greatly reduce the activity of the 518-bp enhancer. These data demonstrate that several cis- and trans-acting components contribute to the activity of the adipocyte P2 enhancer and suggest that ARF6, a novel differentiation-dependent factor, may be a key regulator of adipogenic gene expression.