The inducer of short transcripts, or IST, is an unusual transcriptional element located downstream of the human immunodeficiency virus type 1 (HIV-1) promoter. IST activates HIV-1 transcription, but the resulting RNAs are short and end at approximately position +59. IST, therefore, appears to promote the formation of transcription complexes that are unable to elongate efficiently. This activity contrasts with that of TAR, the target for Tat trans-activation, which upon binding of the viral protein Tat promotes the formation of transcription complexes capable of efficient elongation through the entire viral genome. We have localized and characterized the IST element. Our results indicate that IST is located mainly between positions -5 and +26, although the sequences from positions +40 to +59 also contribute to IST activity. Unlike TAR, which is an RNA element, IST appears to be a DNA element. Thus, the HIV-1 R region is a complex regulatory region with RNA and DNA elements that promote the formation of transcription complexes with different elongation properties.