The mouse alpha-fetoprotein gene is expressed at high levels in the fetal liver and is transcriptionally silenced at birth. The repression is governed, at least in part, by the 250 base pair (bp) AFP promoter. We show here that the AFP promoter is dramatically repressed by HNF3 in HepG2 hepatoma cells. This repression is governed by the region between -205 and -150. Furthermore, this fragment can confer HNF3-mediated repression on a heterologous promoter. The repression is abolished by a mutation that is centered at -165. EMSA analyses using in vivo and in vitro synthesized proteins indicate that HNF3 proteins do not bind DNA from the -205 to -150 region. We propose that HNF3 represses AFP promoter activity through indirect mechanisms that modulate the binding or activity of a liver-enriched factor that interacts with the -165 region of the AFP promoter.