The ontogeny of alpha-fetoprotein (AFP) gene expression has been examined in the fetal and adult mouse gastrointestinal tract. AFP mRNA constitutes approximately 0.1% of total mRNA in the fetal gut. The transcripts were localized by in situ hybridization to the epithelial cells lining the villi of the fetal gut. At birth, AFP mRNA declines rapidly to achieve low adult basal levels, which are not affected by different alleles of raf, a gene that determines the adult basal level of AFP mRNA in the liver. The basal level in the adult gut is the consequence of continued AFP transcription in a small number of enteroendocrine cells that are distributed infrequently on the villi. These cells were identified by double antibody staining with antibodies to chromogranin A, an enteroendocrine cell marker and AFP. Previous studies resulted in the generation of a line of transgenic mice containing an internally deleted AFP gene that was greatly overexpressed in the fetal gut. The basis for the inappropriately high level expression of the transgene was shown to be the consequence of very high levels of transcription in the epithelial cells of the villi rather than to expression in inappropriate cell types. The cis-acting DNA sequences required for expression of the AFP gene in the gut were investigated using Caco-2 cells, a human colon adenocarcinoma cell line. These experiments indicated that, with one exception, the regulatory elements required in both the promoter and enhancer regions of the gene coincided with those that are necessary for high level expression in the liver. The one exception was enhancer II, located 5 kbp of DNA upstream of the gene, which exhibited no activity in Caco-2 cells.