Based on our previous transgenic mice results, which strongly suggested that separate cell-specific cis-acting elements of the mouse pro-alpha 1(I) collagen promoter control the activity of the gene in different type I collagen-producing cells, we attempted to delineate a short segment in this promoter that could direct high-level expression selectively in osteoblasts. By generating transgenic mice harboring various fragments of the promoter, we identified a 117-bp segment (-1656 to -1540) that is a minimal sequence able to confer high-level expression of a lacZ reporter gene selectively in osteoblasts when cloned upstream of the proximal 220-bp pro-alpha 1(I) promoter. This 220-bp promoter by itself was inactive in transgenic mice and unable to direct osteoblast-specific expression. The 117-bp enhancer segment contained two sequences that appeared to have different functions. The A sequence (-1656 to -1628) was required to obtain expression of the lacZ gene in osteoblasts, whereas the C sequence (-1575 to -1540) was essential to obtain consistent and high-level expression of the lacZ gene in osteoblasts. Gel shift assays showed that the A sequence bound a nuclear protein present only in osteoblastic cells. A mutation in the A segment that abolished the binding of this osteoblast-specific protein also abolished lacZ expression in osteoblasts of transgenic mice.