Cholesterol sulfate and transglutaminase 1 are essential for the process of keratinization. Cholesterol sulfate is formed during keratinization and activates the eta isoform of protein kinase C. Transglutaminase 1 is a key enzyme for formation of the cornified envelope in terminally differentiated keratinocytes. In this study, we demonstrated that cholesterol sulfate acts as a transcriptional activator of the transglutaminase 1 gene in normal human keratinocytes. Growth of normal human keratinocytes was inhibited by cholesterol sulfate, but not by its parental cholesterol. Treatment of normal human keratinocytes with cholesterol sulfate induced activity of transglutaminase 1 in a dose- and time-dependent manner. Activation of transcription of transglutaminase 1 by cholesterol sulfate was demonstrated by northern blotting analysis, whereas that by cholesterol was not. In order to identify a cholesterol sulfate responsive region in the transglutaminase 1 gene, plasmids were constructed containing a luciferase reporter gene ligated to deletion fragments of the 5' upstream region of the tranglutaminase 1 gene and were transfected into normal human keratinocytes. Transfected cells were treated with cholesterol sulfate, the phorbol ester 12-O-tetradecanoylphorbol-13-acetate and a high concentration of Ca2+. Our results indicate that the responsive element(s) for cholesterol sulfate and phorbol ester is located upstream of the human transglutaminase 1 gene at a position(s) between -819 and -549, whereas the responsive element for Ca2+ is located at a position between -79 and -49.