Sprouty2 plays a key role in negatively modulating the fibroblast growth factor signaling pathway, which is required for early branching events in embryonic development. The expression of the murine Sprouty2 gene shows a temporally and spatially restricted pattern in developing lung. In order to clarify the molecular mechanisms governing the transcription of the Sprouty2 gene, we first characterized the genomic organization of the human Sprouty2 (hSpry2) gene and mapped its transcription start sites by 5'-rapid amplification of cDNA ends. Subsequently, a 4-kb sequence from the 5'-flanking region of the gene was cloned and determined to contain promoter activity. Detailed truncation analysis of the hSpry2 promoter revealed the presence of context-specific suppressor activity in the distal upstream region. More importantly, we demonstrated that all the elements necessary to achieve strong basal transcription activity were located within the proximal 0.4-kb region. Sequence analysis revealed that this functionally important proximal region contains neither TATA nor CAAT box but an initiator element around the transcription start site. Several cis-acting elements (including AP2, CREB, SP1 and Ets-1) were found to be present in the proximal region, and their interactions with specific nuclear proteins were confirmed by electrophoretic mobility shift assays. To our knowledge, this is the first promoter study of any mammalian Sprouty gene. We propose that the high-level basal expression of hSpry2 is controlled by multiple transcription factors binding to its proximal promoter.