The increased expression of plasminogen activator inhibitor type-1 (PAI-1) is associated with increased concentrations of fatty acids in blood and may accelerate atherogenesis in diabetes. The present study was designed to define mechanisms by which nonesterified (free) fatty acids (FFAs) augment the expression of PAI-1. FFAs increased PAI-1 protein and mRNA expression by HepG2 cells. To identify potential regulatory elements, we constructed chimeric genes by fusing 1313, 853, 610, or 328 bp of human PAI-1 5'-flanking DNA to a luciferase reporter (PAI-LUC). A 2-fold increase in luciferase activity was seen when cells were transfected with PAI-LUC 1313, 863, or 610 and exposed to FFAs. No response to FFAs was seen with PAI-LUC 328 and after deletion of a 72-bp (-599 to -528) fragment from PAI-LUC 1313. This 72-bp fragment conferred FFA responsiveness to a different (simian virus 40) promoter. Two footprinted regions were demonstrated by DNase I analysis. Gel mobility shift assays indicated specific binding of extracted proteins to an FFA response element: 5'-TG(G/C)(1-2)CTG-3'. This sequence is repeated 4 times and is similar to an Sp1-binding site. Sp1 consensus oligonucleotides inhibited binding of extracted proteins to the regulatory elements. Accordingly, FFA-induced increased expression of PAI-1 in HepG2 cells is mediated by the binding of a transcription factor or factors to the repeated fatty acid response element, 5'-TG(G/C)(1-2)CTG-3', that is highly homologous to an Sp1-binding site.