Inflammation inevitably follows injury of various tissues, including bone. Transgenic overexpression of Fra-1, a component of the transcription factor activator protein-1 (AP-1), in various tissues progressively and globally enhances bone formation, but little is known about the possible effects of Fra-1/AP-1 on fracture healing. We created a transverse fracture of the mouse tibial diaphysis and examined fracture healing radiologically, histologically, and immunologically. Strikingly, fracture union was delayed even though the bone formation rate in callus was higher in Fra-1 transgenic (Tg) mice. In these mice, chondrogenesis around the fracture site was impaired, resulting in accumulation of fibrous tissue, which interferes with the formation of a bony bridge across the callus. Curiously, immediately after fracture, induction of the inflammatory mediators TNF-alpha, interleukin (IL)-6, and Cox-2 was significantly suppressed in Fra-1 Tg mice followed, by the reduced expression of Sox-9 and BMP-2. Because serum prostaglandin E(2) (PGE(2)) levels were dramatically low in these mice, we administered PGE(2) to the fracture site using a slow-release carrier. The accumulation of fibrous tissue in Fra-1 Tg mice was significantly reduced by PGE(2) administration, and chondrogenesis near the fracture site was partially restored. These data suggest that the Fra-1-containing transcription factor AP-1 inhibits fracture-induced endochondral ossification and bony bridge formation presumably through suppression of inflammation-induced chondrogenesis.