Aminopeptidase N (APN, EC 3.4.11.2) is an ectopeptidase expressed in lung at the apical surface of alveolar type II epithelial cells. Its expression is upregulated during fetal lung development. To begin to understand the regulation of APN expression during lung development, we used the rapid modification of cDNA ends (RACE) to clone the 5' end of the major APN transcript in rat lung and alveolar type II cells. The cloned sequence revealed a unique 135 bp untranslated exon which genomic cloning and restriction mapping indicated was located more than 14 kb upstream from the coding sequence. A 172 bp genomic fragment flanking the untranslated exon produced a high level of expression of a reporter gene in transient transfection assays using a human lung adenocarcinoma cell line. The DNA fragment includes elements known to be important for expression of lung specific proteins, including the surfactant-associated proteins A, B, and C and the Clara cell specific protein. Comparison of the APN genomic sequences and gene structure from human and rat suggests that the exon present in the rat lung transcript may result from the use of a previously uncharacterized APN promoter.