The ability of pulmonary surfactant to reduce alveolar surface tension requires adequate expression of surfactant protein B (SP-B). Dexamethasone (DEX, 10(-7) M) increases human SP-B mRNA stability by a mechanism that requires a 126-nt-long segment (the 7.6S region) of the 3'-untranslated region (3'-UTR). The objective of this study was to identify sequences in the 7.6S region that mediate regulation of SP-B mRNA stability. The 7.6S region was found to be sufficient for DEX-mediated stabilization of mRNA. Sequential substitution mutagenesis of the 7.6S region indicates that a 90-nt region is required for DEX-mediated stabilization and maintenance of intrinsic stability. In this region, one 30-nt-long element (002), predicted to form a stem-loop structure, is sufficient for DEX-mediated stabilization of mRNA and intrinsic mRNA stability. Cytosolic proteins specifically bind element 002, and binding activity is unaffected whether proteins are isolated from cells incubated in the absence or presence of DEX. While loop sequences of element 002 have no role in regulation of SP-B mRNA stability, the proximal stem sequences are required for DEX-mediated stabilization and specific binding of proteins. Mutation of the sequences that comprise the proximal or distal arm of the stem negates the destabilizing activity of element 002 on intrinsic SP-B mRNA stability. These results indicate that cytosolic proteins bind a single hairpin structure that mediates intrinsic and hormonal regulation of SP-B mRNA stability via mechanisms that involve sequences of the stems of the hairpin structure.