A number of genes encoding neuropeptides are expressed in the peripheral and central nervous systems, in different endocrine organs, and in specialized cells distributed along the gastrointestinal tract. Whether expression of the same neuropeptide gene in different tissues is regulated by similar transcriptional mechanisms or by mechanisms that differ in a cell-specific manner remains unclear. We report on promoter studies on the regulation of the somatostatin gene in immortalized neural precursor cells derived from developing rat forebrain. Expression of the somatostatin gene in these cells was determined by RT-PCR/Southern blot analysis, by immunocytochemistry, and by RIA. We show that in cerebrocortical and hippocampal cells, expression of the somatostatin gene is regulated by several negative and positive DNA cis-regulatory elements located throughout the promoter region. The somatostatin cAMP-response element appears to play a prominent role in neural somatostatin gene expression by acting as a strong enhancer even in the absence of cAMP stimulation. Site-directed mutagenesis followed by transient transfection assays indicated that SMS-TAAT1, SMS-TAAT2, and SMS-UE, three previously identified homeodomain protein-binding regulatory elements that enhance transcription in pancreatic cells, act as repressors of transcription in neural cells. Electrophoretic mobility shifts assays indicate that those elements bind protein complexes that differ between neural and pancreatic cells. Our results support the notion that expression of the somatostatin gene in neural cells occurs via transcriptional mechanisms that are different from those regulating expression of the same gene in pancreatic cells.