Transforming growth factor-b (TGF-b) increases steady-state mRNA levels of several extracellular matrix proteins in mineralized connective tissues. Bone sialoprotein (BSP) is a major constituent of the bone matrix, thought to initiate and regulate the formation of mineral crystals. To determine the molecular pathways of TGF-b1 regulation of bone proteins, we have analyzed the effects of the TGF-b1 on the expression of the BSP in the rat osteosarcoma cell line (ROS 17/2.8). TGF-b1 at 1 ng/ml, increased BSP mRNA levels in ROS 17/2.8 cells ,8-fold; the stimulation was first evident at 3 hr, reached maximal levels at 12 hr and slowly declined thereafter. Since the stability of the BSP mRNA was not significantly affected by TGF-b1, and nuclear ''run-on'' transcription analyses revealed only a ,2-fold increase in the transcription of the BSP gene, most of the increase in BSP mRNA appeared to involve a nuclear post-transcriptional mechanism. Moreover, the effects of TGF-b1 were indirect, since the increase in BSP mRNA was abrogated by cycloheximide (28 µg/ml). To identify the site of transcriptional regulation by TGF-b1, transient transfection analyses were performed using BSP gene promoter constructs linked to a luciferase reporter gene. Constructs that included nt 2801 to 2426 of the promoter sequence were found to enhance transcriptional activity ,1.8-fold in cells treated with TGF-b1. Within this sequence, ,500 nt upstream of the transcription start site, a putative TGF-b activation element (TAE) was identified that contained the 58-portion of the nuclearfactor-1 (NF-1) canonical sequence (TTGGC) overlapping a consensus sequence for activator protein-2 (AP-2). The functionality of the TAE was shown by an increased binding of a nuclear protein from TGF-b1 stimulated cells in gel mobility shift assays and from the attenuation of TGF-b1-induced luciferase activity when cells were co-transfected with a double-stranded TAE oligonucleotide. Competition gel mobility shift analyses revealed that the nuclear protein that binds to the TAE has similar properties to, but is distinct from, NF-1 nuclear protein. These studies have therefore identified a TGF-b activation element (TAE) in the rat BSP gene promoter that mediates the stimulatory effects of TGF-b1 on BSP gene transcription.