Tissue-specific transcription of the apolipoprotein C-III (apoC-III) gene is mainly regulated by synergistic interactions between the liver-enriched transcription factor HNF-4, which binds to the proximal promoter, and ubiquitous factors, which bind to the upstream enhancer region. Here we show that apoC-III expression in HepG2 cells is negatively regulated in response to interleukin-1 (IL-1), and this inhibition is mainly due to transcriptional repression. CAAT enhancer-binding protein delta (C/EBPdelta) was found to be the main mediator of IL-1-induced suppression. Analysis of the apoC-III promoter revealed two IL-1 response elements. The first is located in the proximal promoter region D and the second in the distal enhancer region I. Proximal element D is a high affinity binding site for C/EBPdelta, while the enhancer element I is not directly recognized by this transcription factor. Functional analysis of different combinations of homologous and heterologous promoter constructs revealed that indirect interaction of C/EBPdelta with site I, in the context of the full promoter, leads to repression. C/EBPdelta is activated by phosphorylation during IL-1-induced signal transduction pathway. This modification is important for both DNA binding activity and indirect transrepression of the apoC-III promoter.