Rat liver 3 alpha-hydroxysteroid/dihydrodiol dehydrogenase (3 alpha-HSD/DD), a member of the aldo-keto reductase superfamily, inactivates circulating steroid hormones and may contribute to the carcinogenicity of polycyclic aromatic hydrocarbons (PAHs) by oxidizing trans-dihydrodiols to reactive o-quinones with the concomitant generation of reactive oxygen species. The 3 alpha-HSD/DD gene has been cloned, and its 5'-flanking region contains a negative response element (NRE; -797 to -498 bp) that may repress constitutive expression by binding to Oct transcription factors. Upstream from the NRE are three distal imperfect glucocorticoid response elements (GRE1, GRE2, and GRE3); in addition, a proximal imperfect GRE (GRE4) is adjacent to an Oct binding site in the NRE. When rat hepatocytes were cultured on Matrigel and exposed to dexamethasone (Dex), steady state levels of 3 alpha-HSD/DD mRNA were increased 4-fold in a dose-dependent manner, yielding an EC50 value of 10 nM, Time to maximal response was 24 hr, and the effect was blocked with the anti-glucocorticoid RU486. Measurement of the half-life of 3 alpha-HSD/DD mRNA, with and without Dex treatment, indicated that the increase in steady state mRNA levels was not due to increased mRNA stability. By contrast, nuclear run-off experiments using nuclei obtained from Dex-stimulated hepatocytes indicated that Dex increased transcription of the rat 3 alpha-HSD/DD gene. Tandem repeats of the imperfect GRE1, GRE2, GRE3, and GRE4 were inserted into thymidine kinase-chloramphenicol acetyl-transferase vectors and cotransfected with the human glucocorticoid receptor into human hepatoma cells, On treatment with Dex, maximal trans-activation of the chloramphenicol acetyl-transferase reporter gene activity was mediated via the proximal GRE (GRE4). These data imply that GRE4 is a functional cis-element and that binding of the occupied glucocorticoid receptor to this element increases 3 alpha-HSD/DD gene transcription, A model is proposed for the positive and negative regulation of the rat 3 alpha-HSD/DD gene by the glucocorticoid receptor and Oct transcription factors, respectively.