Transglutaminase 1 (TGase 1) is a tissue-specific enzyme which is expressed in the keratinized stratified squamous epithelia and which catalyzes straightepsilon-(gamma-glutamyl) lysine cross-links of proteins to form the cell envelope at the periphery of cornified cells. A transient expression assay using a luciferase reporter gene linked to the 2.5 kb 5' upstream region of the human TGase 1 gene (TGM1) showed phorbol ester-responsive promoter activity in cultured normal human keratinocytes. To assess its promoter activity in vivo, we generated transgenic mice expressing the Escherichia coli beta-galactosidase gene (lacZ) directed by the 5' upstream region. beta-Galactosidase histochemistry revealed that the TGM1-lacZ transgene was expressed in terminally differentiating keratinocytes in upper layers of stratified squamous epithelia in embryonic, neonatal and adult transgenic mice. The expression pattern was similar to that of endogenous TGase 1 mRNA detected by in situ hybridization. Furthermore, topical application of a phorbol ester to adult tail skin enhanced expression of the transgene as well as TGase 1 mRNA in the epidermis. Thus, the 2.5 kb 5' upstream sequence of TGM1 includes elements regulating tissue- and terminal differentiation-specific gene expression in stratified squamous epithelia.