ACAT catalyzes the formation of cholesteryl esters from cholesterol and long-chain fatty acids. There are two known genes encoding the two ACAT enzymes, ACAT1 and ACAT2 (also known as Soat1 and Soat2). In adult humans, ACAT1 is present in most tissues, whereas ACAT2 is localized to enterocytes and hepatocytes. In this report, we elucidate the mechanisms that control the liver-specific expression of the human ACAT2 gene. We identified hepatic nuclear factor 1 (HNF1) as an important liver-specific trans-acting element for the human ACAT2 gene using the human hepatocellular carcinoma cell lines HuH7 and HepG2. Targeted deletion of the HNF1 binding site in the DNA sequence abolished not only the basal promoter function in HepG2 and HuH7 cells but also the induction of the ACAT2 promoter by HNF1. Electrophoretic mobility shift assay and chromatin immunoprecipitation assay demonstrated that the transcription factors HNF1alpha and HNF1beta interact with this region in the human ACAT2 gene in vitro and in vivo. These data indicate that a) the identified HNF1 binding site serves as a positive regulator sequence, b) the binding site is functionally active both in vivo and in vitro, and c) the transcription factors HNF1alpha and HNF1beta, which bind to this site, play an important part in the regulation of the human ACAT2 promoter.