Previously, we reported that in papilloma-producing 308 mouse keratinocytes, the tumor promoter okadaic acid, a serine-threonine phosphatase inhibitor, increased binding of activator protein 1 (AP-1) to a consensus 12-O-tetradecanoylphorbol-13-acetate-responsive element (Rosenberger, S. F., and Bowden, G. T. (1996) Oncogene 12, 2301-2308). In this study, we investigated the correlation between AP-1 DNA binding and transactivation and examined molecular mechanisms involved in this process. Using a luciferase reporter driven by region -74 to +63 of the human collagenase gene, we demonstrated induction of AP-1-mediated transcription following okadaic acid treatment. By performing in vitro kinase assays, we found elevated activities of extracellular signal-regulated kinase (ERK) 1/2, c-Jun N-terminal kinase, and p38 mitogen-activated protein kinase. The ERK-1/2-specific inhibitor PD 98059 completely abrogated okadaic acid-induced AP-1 transactivation without altering AP-1 expression, DNA binding, or complex composition. Phosphorylation analyses indicated that inhibition of ERK-1/2 decreased okadaic acid-elevated phosphorylation of JunD and FosB. To further examine the role of JunD and FosB in okadaic acid-induced AP-1 transactivation, we generated fusion proteins of the DNA-binding domain of the yeast transcription factor Gal4 and the transactivation domain of either JunD or FosB. Cotransfection experiments of these constructs with a Gal4-luciferase reporter demonstrated that both JunD and FosB are required for okadaic acid-induced transcription. Treatment with PD 98059 reduced JunD/FosB-dependent transactivation, suggesting that ERK-1/2-mediated phosphorylation is a critical component in this process.