Transforming growth factor-beta (TGF-beta) increases the steady-state RNA levels of several fibroblast extracellular matrix proteins. Using DNA transfection, we show that TGF-beta stimulates the activity of the mouse alpha 2(l) collagen promoter 5- to 10-fold in mouse NIH 3T3 and rat osteosarcoma cells. Deletion analysis indicates that a segment of this promoter between -350 and -300, overlapping a nuclear factor 1 (NF1) binding site, is needed for TGF-beta stimulation. A 3 bp substitution mutation abolishing NF1 binding to this site inhibits TGF-beta activation. Insertion of this NF1 binding site 5' to the SV40 early promoter makes the promoter TGF-beta inducible, but the 3 bp substitution does not. Similarly, when the NF1 binding site at the replication origin of adenovirus 2 and 5 is inserted 5' to the SV40 promoter, the promoter responds to TGF-beta. Therefore an NF1 binding site mediates the transcriptional activation of the mouse alpha 2(l) collagen promoter by TGF-beta.