The proteasome regulator REG (PA28gamma) is a conserved complex present in metazoan nuclei and is able to stimulate the trypsin-like activity of the proteasome in a non-ATP dependent manner. However, the in vivo function for REGgamma in metazoan cells is currently unknown. To understand the role of Drosophila REGgamma we have attempted to identify the type of promoter elements regulating its transcription. Mapping the site of the transcription initiation revealed a TATA-less promoter, and a sequence search identified elements found typically in Drosophila genes involved in cell cycle progression and DNA replication. In order to test the relevance of the motifs, REGgamma transcriptional assays were carried out with mutations in the proposed promoter. Our results indicate that a single Drosophila replication-related element sequence, DRE, is essential for REGgamma transcription. To confirm that REGgamma has a role in cell cycle progression, the effect of removing REGgamma from S2 cells was tested using RNA interference. Drosophila cells depleted of REGgamma showed partial arrests in G1/S cell cycle transition. Immuno-staining of Drosophila embryos revealed that REGgamma is typically localized to the nucleus during embryogenesis with increased levels present in invaginating cells during gastrulation. The REGgamma was found dispersed throughout the cell volume within mitotic domains undergoing cell division. Finally, database searches suggest that the DRE system may regulate key members of the proteasome system in Drosophila.