The NF-kappa B target gene A20 serves as a paradigm for gene-specific control of transcription elongation. This gene is regulated by the elongation factor DSIF (DRB sensitivity-inducing factor) under basal and NF-kappa B-activated states by two distinct mechanisms. Prior to NF-kappa B stimulation, the A20 gene is occupied by polymerase II, and elongation is inhibited by DSIF. This inhibition is mediated by an upstream promoter element termed ELIE (elongation inhibitory element). Upon NF-kappa B activation, inhibition of the A20 gene by DSIF persists, but now NF-kappa B and the core promoter regulate DSIF instead of ELIE. Here we investigated the regulation of DSIF by ELIE and the regulatory switch from ELIE to NF-kappa B following NF-kappa B induction. Electrophoretic mobility shift assays revealed two distinct protein complexes that specifically interact with ELIE, one of which is the E-box protein USF1. Interestingly, USF1 is displaced from the A20 promoter upon induction of NF-kappa B. A mutation in the E-box section of ELIE diminished the binding of USF1 and DSIF recruitment. Consistent with these findings, the E-box is crucial for DSIF inhibition in resting, but not NF-kappa B stimulated, cells. These findings reveal a dynamic regulation of DSIF involving either E-box or NF-kappa B depending on the physiological circumstances.