We have previously reported on the presence of a CArG motif at -100 in the Rous sarcoma virus long terminal repeat which binds an avian nuclear protein termed enhancer factor III (EFIII) (A. Boulden and L. Sealy, Virology 174:204-216, 1990). By all analyses, EFIII protein appears to be the avian homolog of the serum response factor (SRF). In this study, we identify a second CArG motif (EFIIIB) in the Rous sarcoma virus long terminal repeat enhancer at -162 and show only slightly lower binding affinity of the EFIII/SRF protein for this element in comparison with c-fos serum response element (SRE) and EFIII DNAs. Although all three elements bind the SRF with similar affinities, serum induction mediated by the c-fos SRE greatly exceeds that effected by the EFIII or EFIIIB sequence. We postulated that this difference in serum inducibility might result from binding of factors other than the SRF which occurs on the c-fos SRE but not on EFIII and EFIIIB sequences. Upon closer inspection of nuclear proteins which bind the c-fos SRE in chicken embryo fibroblast and NIH 3T3 nuclear extracts, we discovered another binding factor, SRE-binding protein (SRE BP), which fails to recognize EFIII DNA with high affinity. Competition analyses, methylation interference, and site-directed mutagenesis have determined that the SRE BP binding element overlaps and lies immediately 3' to the CArG box of the c-fos SRE. Mutation of the c-fos SRE so that it no longer binds SRE BP reduces serum inducibility to 33% of the wild-type level. Conversely, mutation of the EFIII sequence so that it binds SRE BP with high affinity results in a 400% increase in serum induction, with maximal stimulation equaling that of the c-fos SRE. We conclude that binding of both SRE BP and SRF is required for maximal serum induction. The SRE BP binding site coincides with the recently reported binding site for rNF-IL6 on the c-fos SRE. Nonetheless, we show that SRE BP is distinct from rNF-IL6, and identification of this novel factor is being pursued.