In rat hippocampal cultures, the preprotachykinin A (PPTA/Tac1) gene, which encodes the neuropeptide substance P, is regulated by the action of lithium. We used reporter gene and expression constructs to demonstrate that this mechanism of action of lithium is mediated via a previously characterised cis-regulatory Ebox element in the proximal promoter, which binds members of the basic Helix-Loop-Helix family of transcription factors. Consistent with this, in hippocampal cells, both the expression of the endogenous gene and the function of this promoter element are differentially regulated by the basic Helix-Loop-Helix factors, upstream stimulatory factor 1 and 2 (USF1/2). In addition, the genes for USF1 and USF2 are differentially regulated by lithium in these cells. Our data implicate USF1 as a major regulator of the action of lithium on the proximal PPTA promoter.