In cooperation with an activated ras oncogene, the site-dependent AP-1 transcription factor c-Jun transforms primary rat embryo fibroblasts (REF). Although signal transduction pathways leading to activation of c-Jun proteins have been extensively studied, little is known about c-Jun cellular targets. We identified c-Jun-upregulated cDNA clones homologous to the tenascin-C gene by differential screening of a cDNA library from REF. This tightly regulated gene encodes a rare extracellular matrix protein involved in cell attachment and migration and in the control of cell growth. Transient overexpression of c-Jun induced tenascin-C expression in primary REF and in FR3T3, an established fibroblast cell line. Surprisingly, tenascin-C synthesis was repressed after stable transformation by c-Jun compared to that in the nontransformed parental cells. As assessed by using the tenascin-C (-220 to +79) promoter fragment cloned in a reporter construct, the c-Jun-induced transient activation is mediated by two binding sites: one GCN4/AP-1-like site, at position -146, and one NF-kappaB site, at position -210. Furthermore, as demonstrated by gel shift experiments and cotransfections of the reporter plasmid and expression vectors encoding the p65 subunit of NF-kappaB and c-Jun, the two transcription factors bind and synergistically transactivate the tenascin-C promoter. We previously described two other extracellular matrix proteins, SPARC and thrombospondin-1, as c-Jun targets. Thus, our results strongly suggest that the regulation of the extracellular matrix composition plays a central role in c-Jun-induced transformation.