It has been known for nearly 30 years that glucocorticoid receptor stimulation induces increased tyrosine hydroxylase (TH) gene expression. However, the mechanism mediating this effect has remained elusive. Sequences with homology to known glucocorticoid‐responsive elements (GRE) have been identified in the 5′ flanking region of the TH gene of several vertebrate species, but none has been shown to be functional. To identify the GRE element(s) in the TH promoter, we generated chimeric constructs in which different lengths of the 5′ flanking sequences of the mouse TH gene (3.6, 1.1 and 0.8 kb) were ligated to a luciferase reporter gene. Dexamethasone treatment increased luciferase expression only in cells transiently transfected with the construct containing 3.6 kb of the TH 5′ flanking DNA. Co‐administration of mifepristone (RU486), a glucocorticoid receptor antagonist, blocked this effect. We identified a TH‐GRE sequence (5′‐GGCACAGTGTGGTCT) in the mouse 5′ flanking DNA between −2435 and −2421 from the transcription start. Responsiveness to dexamethasone was lost following deletion of this sequence. To determine the ability of this element to function in a heterologous promoter, we prepared a chimeric construct in which the TH‐GRE sequence was cloned just upstream of a minimal thymidine kinase (TK) promoter. Promoter activity was increased 2‐fold in dexamethasone‐treated PC12 cells transfected with the TH‐GRE‐TK construct. These results provide strong evidence that the 15 base‐pair sequence in the 5′ flanking DNA of the mouse TH gene functions as a glucocorticoid response element. This is the first report identifying a functional glucocorticoid response element in the promoter region of the TH gene of any species.