Tissue and cell-type specific expression of the rat osteocalcin (rOC) gene involves the interplay of multiple transcriptional regulatory factors. In this report we demonstrate that AML-1 (acute myeloid leukemia-1), a DNA-binding protein whose genes are disrupted by chromosomal translocations in several human leukemias, interacts with a sequence essential for enhancing tissue-restricted expression of the rOC gene. Deletion analysis of rOC promoter-chloramphenicol acetyltransferase constructs demonstrates that an AML-1-binding sequence within the proximal promoter (-138 to -130 nt) contributes to 75% of the level of osteocalcin gene expression. The activation potential of the AML-1-binding sequence has been established by overexpressing AML-1 in osteoblastic as well as in nonosseous cell lines. Overexpression not only enhances rOC promoter activity in osteoblasts but also mediates OC promoter activity in a nonosseous human fibroblastic cell line. A probe containing this site forms a sequence specific protein-DNA complex with nuclear extracts from osteoblastic cells but not from nonosseous cells. Antisera supershift experiments indicate the presence of AML-1 and its partner protein core-binding factor beta in this osteoblast-restricted complex. Mutations of the critical AML-1-binding nucleotides abrogate formation of the complex and strongly diminish promoter activity. These results indicate that an AML-1 related protein is functional in cells of the osteoblastic lineage and that the AML-1-binding site is a regulatory element important for osteoblast-specific transcriptional activation of the rOC gene.