A large percentage of human hepatomas produce alpha-fetoprotein (AFP), but the levels of AFP expression vary greatly among hepatomas. To understand the molecular basis for this variation, we analyzed transcriptional regulatory activities associated with the 5'-flanking region of the AFP gene in two human hepatoma cell lines, HuH-7 and huH-1/cl-2, which produce a high and a low level of AFP, respectively. We found that the low level of AFP production in huH-1/cl-2 is due to the action of at least two silencer regions located between the enhancer and the promoter of the AFP gene. In contrast, no silencer activity is expressed in HuH-7. We identified 5'-CTTCATAACTAATACTT-3' to be a core sequence responsible for the negative regulatory activity. This sequence is repeated four times in a strong, distal silencer region, Sd, whereas one copy is present in a weak, proximal silencer region, Sp. The silencer reduces transcriptional initiation by blocking enhancer activation of the AFP promoter in a position-dependent manner. The silencer functions in the presence of positive transcription factors and may play a key role in developmental repression as well as variable expression of the AFP gene in hepatomas.