An Alu source gene, called the EPL Alu, was previously isolated by a phylogenetic strategy. Sequences flanking the EPL Alu family member stimulate its RNA polymerase III (Pol III) template activity in vitro. One cis-acting element maps within a 40-nucleotide region immediately upstream to the EPL Alu. This same region contains an Ap1 site which, when mutated, abolishes the transcriptional stimulation provided by this region. The flanking sequence, as assayed by gel mobility shift, forms sequence-specific complexes with several nuclear factors including Ap1. These results demonstrate that an ancestral Alu source sequence fortuitously acquired positive transcriptional control elements by insertion into the EPL locus, thereby providing biochemical evidence for a model which explains the selective amplification of Alu subfamilies.