We describe the genomic organization and the functional promoter of the monocyte specific gene Dif-2, the human homologue to genes in mouse (gly96) and rat (PRG1), that is downregulated during cell differentiation. The Dif-2 gene consists of two exons and a single intron of 112 bp in length. RNase protection assay indicates one major transcription start site. Sequence analysis reveals several consensus sequences for transcription factors including NF-kappa B, C/EBP, SP1, and the lack of a classical TATA-box. To demonstrate promoter activity, DNA fragments of the Dif-2 5'-flanking region were ligated upstream to the luciferase gene and transfected into HepG2 and HeLa cells. A minimal promoter element between nt -158 and nt +74 containing NF-kappa B and SP1 binding sites was shown to be sufficient for basal activity. These transcription factor binding sites, which are conserved between Dif-2, gly96, and PRG1 promoter regions, indicate a significant role for Dif-2 expression and may explain LPS and C2-ceramide sensitivity. The Dif-2 gene was mapped to chromosome 6p21.3 using in situ hybridization technique.