While the 5' cis-acting sequence of mouse hepatitis virus (MHV) for genomic RNA replication has been determined in several defective interfering (DI) RNA systems, it remains elusive for subgenomic RNA transcription. Previous studies have shown that the leader RNA in the DI genome significantly enhances the efficiency of DI subgenomic mRNA transcription, indicating that the leader RNA is a cis-acting sequence for mRNA transcription. To further characterize the cis-acting sequence, we made a series of deletion mutants, all but one of which have an additional deletion of the cis-acting signal for replication in the 5' untranslated region. This deletion effectively eliminated the replication of the DI-chloramphenicol acetyltransferase (CAT)-reporter, as demonstrated by the sensitive reverse transcription (RT)-PCR. The ability of these replication-minus mutants to transcribe subgenomic mRNAs was then assessed using the DI RNA-CAT reporter system. Results from both CAT activity and mRNA transcripts detected by RT-PCR showed that a 5'-proximal sequence of 35 nucleotides (nt) at nt 25 to 59 is a cis-acting sequence required for subgenomic RNA transcription, while the consensus repeat sequence of the leader RNA does not have such effect. Analyses of the secondary structure indicate that this 35-nt sequence forms two stem-loops conserved among MHVs. Deletion of this sequence abrogated transcriptional activity and disrupted the predicted stem-loops and overall RNA secondary structure at the 5' untranslated region, suggesting that the secondary structure formed by this 35-nt sequence may facilitate the downstream consensus sequence accessible for the discontinuous RNA transcription. This may provide a mechanism by which the 5' cis-acting sequence regulates subgenomic RNA transcription. The 5'-most 24 nt are not essential for transcription, while the 9 nt immediately downstream of the leader enhances RNA transcription. The sequence between nt 86 and 135 had little effect on transcription. This study thus defines the cis-acting transcription signal at the 5' end of the DI genome.