A sequence (hlyR) of about 600 bp which enhances the expression of hemolysin (HlyA) more than 50-fold was identified in the plasmid pHly152-specific hemolysin (hly) determinant. Deletion of this entire hlyR sequence led to the same low level of hemolysin synthesis and excretion as that expressed by the recombinant plasmid pANN202-312. HlyR was active in cis but its activity was orientation-dependent. The enhancing sequence, hlyR, is separated from the promoter phlyI transcribing hlyC, hlyA and possibly hlyB by more than 1.5 kb including an IS2 element. Stepwise removal of the hlyR sequence from its 5' end by exonuclease III (ExoIII) digestion yielded several types of deletion mutants which expressed decreasing amounts of hemolysin. A similar observation was made when hlyR was shortened by ExoIII from its 3' end, which suggests that more than one functional region may be present in the hlyR sequence. A deletion of 717 bp within the adjacent IS2 element reduced the activity of hlyR only slightly, indicating that IS2 is not directly involved in the enhancement mechanism but that it may support an optimal positioning in hlyR relative to the hly promoter. The nucleotide sequence of hlyR is rich in A + T and does not contain an extended open reading frame, but exhibits several sequence motives that may represent sites for protein binding and DNA bending.