The Drosophila midgut is an excellent model for evaluation of gene networks that regulate adult stem cell proliferation and differentiation. The Drosophila p38b (D-p38b) gene has been shown to be involved in intestinal stem cell (ISC) proliferation and differentiation in the adult midgut. Here, we report that D-p38b gene expression is regulated by DREF (DNA replication-related element binding factor) in the adult midgut. We have identified a DRE in the 5'-flanking region of the D-p38b gene and showed that DREF could bind to this DRE via a gel mobility shift assay and a ChIP assay. Base-substitution mutations of the D-p38b promoter DRE and analyses of transformants carrying D-p38b-lacZ or D-p38b-DREmut-lacZ indicated that this DRE is required for the activity of the D-p38b gene promoter. Furthermore, by using the GAL4-UAS system, we showed that DREF regulates the activity of the D-p38b gene promoter in adult ISCs and progenitors. In addition, the D-p38b knockdown phenotypes in the midgut were rescued by DREF overexpression, suggesting a functional link between these two factors. Our results suggest that the D-p38b gene is regulated by the DREF pathway and that DREF is involved in the regulation of proliferation and differentiation of Drosophila ISCs and progenitors.