Annexin I(cp35) is the major PRL-stimulated gene in the pigeon cropsac. The regulation of its promoter has been studied by in vitro assays for nuclear protein binding and transcription. Proteins present in nuclear extracts of PRL-stimulated, but not control, pigeon cropsac contained factors which specifically bound to sequences within 73 base pairs upstream of the cp35 transcription start point. The binding of some of the factors was localized to a region between -32 and -73 by gel-shift assays. Cell-free transcription was used to determine whether the cp35 promoter could be influenced by factors present in cropsac nuclear extract. HeLa cell nuclear extract transcribed the cp35 gene at a basal rate. Transcription of the cp35 gene, but not adml, was synergistically enhanced by nuclear extract from PRL-stimulated cropsac. Nuclear extract from unstimulated pigeon cropsacs did not stimulate either cp35 or adml transcription. A template from which sequences upstream of the cp35 gene TATA box were deleted was transcribed by HeLa cell extract but unaffected by any cropsac factors. These results demonstrate that PRL can cause the expression of one or more nuclear factors that bind to 5'-flanking DNA of cp35 and activate the gene's transcription.