A previously characterized retinoic acid response element (RARE1) in the phosphoenolpyruvate carboxykinase (PEPCK) gene promoter confers approximately 50% of the response of this gene to retinoic acid (RA). Transient transfection experiments were performed using constructs containing progressive 5' deletions of the PEPCK promoter to locate other elements that contribute to the RA response. A second RARE (RARE2) was located between - 402 and -306. Methylation interference and mobility gel shift assays indicated that RAR/RXR bound specifically to a segment of DNA located between -337 and -321. This region contains consensus and degenerate half-sites for receptor binding separated by 5 bp. Mutations in either half-site selectively decreased the RA response and diminished RAR/RXR binding in mobility gel shift assays. When both RARE1 and RARE2 were mutated, 80% of the RA response was lost. Finally, RARE2 conferred a RA response in a heterologous promoter context. We conclude that RAR/RXR binds to RARE2, and that this DR5-type element is a major contributor to the response of the PEPCK gene to RA.