The NF-kappaB target gene A20 serves as a paradigm for gene-specific control of transcription elongation. This gene is regulated by the elongation factor DSIF (DRB sensitivity-inducing factor) under basal and NF-kappaB-activated states by two distinct mechanisms. Prior to NF-kappaB stimulation, the A20 gene is occupied by polymerase II, and elongation is inhibited by DSIF. This inhibition is mediated by an upstream promoter element termed ELIE (elongation inhibitory element). Upon NF-kappaB activation, inhibition of the A20 gene by DSIF persists, but now NF-kappaB and the core promoter regulate DSIF instead of ELIE. Here we investigated the regulation of DSIF by ELIE and the regulatory switch from ELIE to NF-kappaB following NF-kappaB induction. Electrophoretic mobility shift assays revealed two distinct protein complexes that specifically interact with ELIE, one of which is the E-box protein USF1. Interestingly, USF1 is displaced from the A20 promoter upon induction of NF-kappaB. A mutation in the E-box section of ELIE diminished the binding of USF1 and DSIF recruitment. Consistent with these findings, the E-box is crucial for DSIF inhibition in resting, but not NF-kappaB-stimulated, cells. These findings reveal a dynamic regulation of DSIF involving either E-box or NF-kappaB depending on the physiological circumstances.