Myeloblast cell line K562, when stably transfected with the human genomic c-fes sequence encoding a proto-oncogene tyrosine-protein kinase, acquires the characteristics of more mature granulocytic cells (WS-1 cells) and the ability to undergo differentiation (Yu, G., Smithgall, T. E., and Glazer, R. I. (1989) J. Biol. Chem. 264, 10276-10281). To explore the role of transcription factors in the differentiation process, WS-1 cells were analyzed for the presence of DNA-binding proteins capable of interacting with the 5'-long terminal repeat (LTR) region of human immunodeficiency virus (HIV)-1, that contains the binding sequences for transcription factors Sp1 and NFKB. Southwestern blotting and mobility shift assays revealed the presence of Sp1 in K562 and WS-1 cells. The DNA-binding activity of Sp1 was significantly greater in WS-1 cells than in K562 cells, despite the detection by immuno-blotting of equivalent quantities and degrees of heterogeneity of Sp1 in both cell lines. DNA footprinting of the HIV-1 5'-LTR demonstrated that two of the three Sp1-binding sites and both NFKB binding sequences were protected by nuclear extracts from WS-1 cells, while no protection was afforded by nuclear extracts from K562 cells. Analysis of transcription in vitro by primer extension revealed enhanced initiation of transcription from the HIV-1 5'-LTR by nuclear extracts from WS-1 cells, but not from K562 cells. These data indicate that the response evoked by the c-fes tyrosine-protein kinase leads to enhanced DNA binding activity of Sp1 and NFKB, that results in the activation of transcription from the HIV-1 5'-LTR.