Glucocorticoids rapidly and specifically inhibit transcription of the pro-opiomelanocortin (POMC) gene in the anterior pituitary, thus offering a model for studying negative control of transcription in mammals. We have defined an element within the rat POMC gene 5'-flanking region that is required for glucocorticoid inhibition of POMC gene transcription in POMC-expressing pituitary tumor cells (AtT-20). This element contains an in vitro binding site for purified glucocorticoid receptor. Site-directed mutagenesis revealed that binding of the receptor to this site located at position base pair -63 is essential for glucocorticoid repression of transcription. Although related to the well-defined glucocorticoid response element (GRE) found in glucocorticoid-inducible genes, the DNA sequence of the POMC negative glucocorticoid response element (nGRE) differs significantly from the GRE consensus; this sequence divergence may result in different receptor-DNA interactions and may account at least in part for the opposite transcriptional properties of these elements. Hormone-dependent repression of POMC gene transcription may be due to binding of the receptor over a positive regulatory element of the promoter. Thus, repression may result from mutually exclusive binding of two DNA-binding proteins to overlapping DNA sequences.