The Sca-1 antibody recognizes antigens encoded by members of the Ly-6 multigene family. These antigens are expressed on fetal and adult hematopoietic stem cells, progenitor cells, mature activated T cells, and some nonhematopoietic cells and are most likely encoded by the Ly- 6E.1 and Ly-6A.2 genes. Characterization and isolation of regulatory elements of Ly-6E.1 and A.2 genes that govern tissue-specific and high levels of expression in the cells of the hematopoietic system (particularly stem cells) are of considerable interest. To characterize the control elements of this gene, we have cloned a 30-kb fragment encoding a fully functional Ly-6E.1 gene and 13 kb of 5′ and 13 kb of 3′ flanking sequence. Transfection studies in murine erythroleukemia (MEL) cells show that a 14-kb BamHI fragment from this clone is sufficient to confer Ly-6E.1 gene expression at levels equivalent to those of the endogenous gene. By mapping regions of chromatin sensitive to DNase I digestion, we have located hypersensitive sites in the 5′ and 3′ regions of the gene in FDCP-1 cells, MEL cells, and various T- cell lines. The appearance of two 5′ hypersensitive sites in hematopoietic cells correlates with Ly-6E.1 expression after gamma- interferon induction. We show that the presence of hypersensitive sites in the 5′ and 3′ regions corresponds to Sca-1 expression, and we also discuss the localization of putative regulatory control elements.