The mb-1 gene encodes an integral membrane protein that appears to be required for the surface expression and signalling function(s) of the immunoglobulin receptor on B lymphocytes. The gene is expressed in a lineage- restricted manner. It is activated early in B-cell ontogeny, continues to be expressed in mature B cells, but is turned off in terminally differentiated plasma cells. We have identified the mb-1 promoter and functionally tested its activity by transient transfections. A 737-bp promoter fragment preferentially stimulates accurately initiated transcription in mb-1- expressing B cells. Deletion analysis of the promoter suggests the presence of two functional domains, proximal and distal. Both domains independently activate transcription from a heterologous promoter. The distal domain functions in a cell-type- and stage-specific manner, activating transcription in B cells but not in T cells or plasma cells. A 25-bp element within this domain is necessary and sufficient for activity. This element is recognized by a novel cell-type- and stage-specific transcription factor termed BLyF. The binding of BLyF completely correlates with the ability of the regulatory element to stimulate transcription. Thus, BLyF appears to positively regulate transcription of the mb-1 gene. Our results also suggest that the inactivity of the mb-1 locus in plasma cells is not simply due to the loss of BLyF activity.