Interferon regulatory factor-8 (IRF-8)/interferon consensus sequence-binding protein (ICSBP) is a transcription factor that controls myeloid-cell development. Microarray gene expression analysis of Irf-8-/- myeloid progenitor cells expressing an IRF-8/estrogen receptor chimera (which differentiate into macrophages after addition of estradiol) was used to identify 69 genes altered by IRF-8 during early differentiation (62 up-regulated and 7 down-regulated). Among them, 4 lysosomal/endosomal enzyme-related genes (cystatin C, cathepsin C, lysozyme, and prosaposin) did not require de novo protein synthesis for induction, suggesting that they were direct targets of IRF-8. We developed a reporter assay system employing a self-inactivating retrovirus and analyzed the cystatin C and cathepsin C promoters. We found that a unique cis element mediates IRF-8-induced activation of both promoters. Similar elements were also found in other IRF-8 target genes with a consensus sequence (GAAANN[N]GGAA) comprising a core IRF-binding motif and an Ets-binding motif; this sequence is similar but distinct from the previously reported Ets/IRF composite element. Chromatin immunoprecipitation assays demonstrated that IRF-8 and the PU.1 Ets transcription factor bind to this element in vivo. Collectively, these data indicate that IRF-8 stimulates transcription of target genes through a novel cis element to specify macrophage differentiation.