The Larval serum protein-2 gene (Lsp-2) of Drosophila melanogaster encodes one of the major hexameric haemolymph proteins of third-instar larvae and a major component of adult serum. Regulated transcription of Lsp-2 results in high-level, ecdysone-stimulated expression throughout the larval fat body and low-level, spatially restricted expression in the adult fat cells. To localize cis-acting regulatory se quences responsible for the stage- and tissue-specific activity of Lsp-2, the expression of Lsp-2–IacZ fusion genes was studied by P element-mediated germline transformation of Drosophila. A 230 base pair larval enhancer, which includes an ecdysone response element (EcRE), specifically targets gene activity to the larval fat body. Although the adult mode of Lsp-2 expression depends on the larval enhancer, additional negative regulatory elements dictate both tissue-specificity and unique spatial restriction within the adult fat body. Implications of these findings for the identification of fat body-specific gene regulatory units in other insects are discussed.