Although circadian transcription of Period2 (Per2) is fundamental for the generation of circadian rhythm, the molecular mechanism remains unclear. Here we report that cell-autonomous circadian transcription of Per2 is driven by two transcriptional elements, one for rhythm generation and the other for phase control. The former contains the E-box-like sequence (CACGTT) that is sufficient and indispensable to drive oscillation, and indeed circadian transcription factors site-specifically bind to it. Furthermore, the nature of this atypical E-box is different from that of the classical circadian E-box. The current feedback loop model is based mainly on Period1. Our results provide not only compelling evidence in support of this model but also an explanation for a general basic mechanism to produce various patterns in the phase and amplitude of cell-autonomous circadian gene expression.