Collagenase1 (MMP1) and stromelysin1 (MMP3) are extracellular proteolytic enzymes that degrade connective tissue macromolecules and basement membranes. Both genes are regulated by the Ets and Fos/Jun families of transcription factors/oncoproteins. Here, we show that two members of the Ets-family, Ets2 and Erg and their combinations differentially regulate collagenase1 and stromelysin1 promoter activity. In transiently transfected cells, Ets2 activates both promoters whereas Erg induces collagenase1 but not stromelysin1 promoter activity. Moreover, Erg completely inhibits stromelysin1 promoter activation by Ets2. In gel shift assays however, the Erg protein bound little or not to the collagenase1 promoter, whereas it bound to the stromelysin1 promoter. By site-specific mutagenesis, we identified one major site at -88 that abolished collagenase1 promoter activation by Erg. Surprisingly, mutation of the collagenase1 AP1 site at -73 also abolished the activation by Erg suggesting that Erg cooperates with Fos/Jun in collagenase1 promoter regulation. Indeed, gel shift and in vitro protein interaction studies showed that Erg binds to the Fos/Jun complex. Thus, Erg represents the first example of a transcription factor that can distinguish between the collagenase1 and stromelysin1 promoters in that when Erg is recruited by Fos/Jun at the promoter, it transcriptionally activates collagenase1 gene but not stromelysin1 expression.