The upstream region of penicillin G acylase (PGA) gene in E. coli was analyzed. Several recombinant plasmids containing pga gene and various size of the upstream region were constructed by using restriction endonucleases and exonuclease Ba131. It was found that the sequence located within 758-713 bps upstream from the translational initiation site was needed for the activation of psa gene by phenylacetic acid and that the sequence had directionality of action. It was also found that the deletion of -292 to -243 sequence resulted in higher expression of psa gene. Thus the upstream region of psa gene has two opposing roles, namely a positive and negative role in the expression of psa gene.