The microphthalmia transcription factor (MITF), a basic-helix-loop-helix zipper factor, regulates distinct target genes in several cell types. We hypothesized that interaction with the Ets family factor PU.1, whose expression is limited to hematopoietic cells, might be necessary for activation of target genes like tartrate-resistant acid phosphatase (TRAP) in osteoclasts. Several lines of evidence were consistent with this model. The combination of MITF and PU.1 synergistically activated the TRAP promoter in transient assays. This activation was dependent on intact binding sites for both factors in the TRAP promoter. MITF and PU.1 physically interacted when coexpressed in COS cells or in vitro when purified recombinant proteins were studied. The minimal regions of MITF and PU.1 required for the interaction were the basic-helix-loop-helix zipper domain and the Ets DNA binding domain, respectively. Significantly, mice heterozygous for both the mutant mi allele and a PU.1 null allele developed osteopetrosis early in life which resolved with age. The size and number of osteoclasts were not altered in the double heterozygous mutant mice, indicating that the defect lies in mature osteoclast function. Taken in total, the results afford an example of how lineage-specific gene regulation can be achieved by the combinatorial action of two broadly expressed transcription factors.