Cancer is a progressive disease in which a tumor cell temporally develops qualitatively new transformation related phenotypes or a further elaboration of existing transformation associated properties. Subtraction hybridization identified a novel gene associated with transformation progression in mutant adenovirus type 5, H5ts125, transformed rat embryo cells, progression elevated gene-3 (PEG-3). To define the mechanism by which expression of PEG-3 is enhanced as a function of cancer progression a 5'-flanking promoter region of approximately 2.0-kb, PEG-Prom, was isolated, cloned and characterized. The full-length and various mutated regions of the PEG-Prom were linked to a luciferase reporter construct and evaluated for promoter activity during cancer progression. These assays demonstrate a requirement for AP1 and PEA3 sites adjacent to the TATA box region of PEG-3 in mediating basal promoter activity and the enhanced expression of PEG-3 in progressed H5ts125-transformed rat embryo cells. An involvement of AP1 and PEA3 in PEG-3 regulation was also confirmed by electrophoretic mobility shift assays (EMSA) and transfection studies with cJun and PEA3 expression vectors. Our findings document the importance of both AP1 and PEA3 transcription factors in mediating basal and elevated expression of PEG-3 in H5ts125-transformed rat embryo cells displaying an aggressive and progressed cancer phenotype.