This study demonstrates that ATF-2 cooperates with Smad3 to regulate the rate of chondrocyte maturation in response to TGF-beta. ATF-2 was rapidly phosphorylated in chick embryonic cephalic sternal chondrocytes following treatment with TGF-beta, and the effect was dependent upon p38 kinase activity. Transient transfection of both wild-type ATF-2 or Smad3 activated the TGF-beta-responsive reporter, p3TP-Lux, and synergistic effects were observed with ATF-2 and Smad3 coexpression. The effect of Smad3 and ATF-2 alone and in combination on chondrocyte maturation was examined in cultures simultaneously infected with RCAS viruses expressing different viral envelope proteins. When expressed alone, wild-type ATF-2 or Smad3 both inhibit colX expression and partially mimic the effects of exogenous TGF-beta. However, in combination the effects were additive and similar to the inhibitory effects of TGF-beta on colX expression. Loss of function experiments using dominant negative ATF-2 or Smad3 partially blocked the inhibitory effect of TGF-beta on colX, while together the blockade was complete. Similar effects were observed with another TGF-beta-responsive gene, PTHrP. However, the induction of colX by BMP-2 was not affected by overexpression of either wild-type or dominant negative ATF-2, indicating specificity for TGF-beta signaling. In contrast, although TGF-beta does not activate CRE/CREB signaling, dominant negative CREB enhanced colX expression in control and in TGF-beta and BMP-2-treated cultures. Thus, ATF-2 regulates chondrocyte maturation as a direct target of TGF-beta signaling while CREB regulates differentiation by targeting genes independent of the individual signaling effects of TGF-beta or BMP-2.