Transcription of the human collagenase I gene is induced by phorbol esters and repressed by glucocorticoids. Both types of regulation are mediated by the major enhancer element of the gene, which is localized between positions -73 and -65. The enhancer suffices to transmit positive and negative signals to a heterologous promoter or to a minimal promoter carrying only the TATA-box, both detected by the appearance of chloramphenicol-acetyl-transferase transcribed from the reporter gene linked to the promoters. Sequences 5' of the enhancer modulate its activity. Up- and down-regulation of gene constructs which contain only the collagenase enhancer linked to a heterologous promoter, are independent of ongoing protein synthesis, suggesting posttranslational modification of the transcription factor binding to the enhancer. Repression by glucocorticoids depends on an activated glucocorticoid receptor; a tenfold lower glucocorticoid concentration is needed for repression of the collagenase gene as compared to the activation of the mouse mammary tumor virus long terminal repeat. Immunoprecipitates of the dexamethasone receptor contain AP-1, suggesting a direct interaction of both transcription factors; this interaction may lead to the inactivation of AP-1. The action mechanism of phorbol esters and dexamethasone confirms the central role of AP-1 in proliferation control and tumor promotion. It appears that the most effective tumor promoter 12-O-tetradecanoyl-phorbol-13-acetate (TPA) and the most effective anti-tumor promoter dexamethasone exert their action through the modulation of the same transcription factor.