Cartilage matrix protein (CMP) is synthesized by chondrocytes in a developmentally regulated manner. Here we have dissected promoter upstream elements involved in its transcriptional regulation. We show that although the 79-base pair CMP minimal promoter is promiscuous, 1137 base pairs of 5'-flanking region are capable of directing tissue- and developmental stage-specific transcription when fused to a reporter gene. This results from two positive control regions which, in proliferating chondrocytes, relieve the repression mediated by two non-tissue-specific negative control regions. Characterization of the promoter proximal silencer by DNase I footprinting and gel shifts revealed the presence of two elements, SI and SII, which bound mesenchymal cell proteins. Methylation interference analysis indicated a gapped palindromic binding site similar to nuclear factor I (NF-I) family proteins within SI, but only a half-site within SII. Gel shift assays with specific NF-I and mutated SI competitors, binding of recombinant NF-I, as well as supershift analysis with NF-I-specific antiserum verified the binding of NF-I family proteins to the SI element. Double-stranded SI and SII oligonucleotides inserted in single copy in either orientation were found to repress both homologous and heterologous promoters upon transfection into mesenchymal cells. Transcriptional repression also occurred when a consensus NF-I site itself was fused to the CMP minimal promoter. We conclude that NF-I-related protein(s) can mediate transcriptional repression in cells of mesenchymal origin.