The transglutaminase 3 enzyme is expressed during the late stages of the terminal differentiation of the epidermis and in certain cell types of the hair follicle. The enzyme is thought to be critically involved in the cross-linking of structural proteins and in the formation of the cornified cell envelope, thereby contributing to rigid structures that play vital roles in shape determination and/or barrier functions. To explore the mechanisms regulating the expression of the transglutaminase 3 gene (TGM3), 3.0 kilobase pairs of sequences upstream from the transcription start site were assessed for their ability to control the expression of a chloramphenicol acetyltransferase reporter gene. Deletion analyses in transiently transfected epidermal keratinocytes defined sequences between -126 and -91 as the proximal promoter region of the gene, and which can confer epithelial-specific expression to the TGM3 gene in vitro. Mutation and DNA-protein binding analyses indicated that a complex interaction between adjacent Sp1- and ets-like recognition motifs with their cognate binding factors is required for the function of the TGM3 promoter. As these TGM3 sequences can confer promoter/enhancer activity to reporter genes at a level comparable to the powerful SV40 promoter, they may be useful for gene therapy in keratinocytes.