Transcriptional repression is utilized by human cytomegalovirus to regulate expression of the immediate-early US3 gene. Sequences located 3' of the US3 TATA box are required for down regulation of expression. Mutagenesis of US3 sequences identified a 10-nucleotide region that is essential for transcriptional repression. In addition to the 10-nucleotide element, an additional region, which includes the US3 initiator element, was needed to confer repression on a heterologous promoter. Thus, a 19-nucleotide element (18 to +1 relative to the transcription start site) functioned as a transcriptional repressive element (tre). The tre repressed transcription in a position-dependent but orientation-independent manner. In vivo footprinting experiments demonstrated that transcriptional repression is associated with a decrease in protein interactions with the US3 promoter and surrounding sequences. The data presented here suggest that the association of an as yet unidentified repressor protein with the tre represses transcription by inhibiting assembly of the transcription initiation complex on the US3 promoter.