Reactive oxygen species (ROS) cause oxidative stress and aging. The catalase gene is a key component of the cellular antioxidant defense network. However, the molecular mechanisms that regulate catalase gene expression are poorly understood. In this study, we have identified a DNA replication-related element (DRE; 5'-TATCGATA) in the 5'-flanking region of the Drosophila catalase gene. Gel mobility shift assays revealed that a previously identified factor called DREF (DRE- binding factor) binds to the DRE sequence in the Drosophila catalase gene. We used site-directed mutagenesis and in vitro transient transfection assays to establish that expression of the catalase gene is regulated by DREF through the DRE site. To explore the role of DRE/DREF in vivo, we established transgenic flies carrying a catalase-lacZ fusion gene with or without mutation in the DRE. The beta-galactosidase expression patterns of these reporter transgenic lines demonstrated that the catalase gene is upregulated by DREF through the DRE sequence. In addition, we observed suppression of the ectopic DREF-induced rough eye phenotype by a catalase amorphic Cat(n1) allele, indicating that DREF activity is modulated by the intracellular redox state. These results indicate that the DRE/DREF system is a key regulator of catalase gene expression and provide evidence of cross-talk between the DRE/DREF system and the antioxidant defense system.