AP-2gamma is a member of the AP-2 transcription factor family, is highly enriched in the trophoblast cell lineage, and is essential for placental development. In an effort to identify factors regulating AP-2gamma gene expression, we isolated and characterized the promoter and 5'-flanking region of the mouse and human AP-2gamma genes. The transcription start site of the mouse AP-2gamma gene was mapped by primer extension and 5' rapid amplification of cDNA ends. Deletion analysis of the 5'-flanking region revealed a 704-base pair (bp) sequence located approximately 6 kilobases (kb) upstream of the transcription start site that is required for enhanced expression in trophoblast cells. Additional gene transfer studies showed that basal promoter activity resides within a highly conserved, approximately 200-bp DNA sequence located immediately upstream of the transcription start site. The conserved region is highly GC-rich and lacks typical TATA or CCAAT boxes. Multiple potential Sp- and AP-2-binding sites are clustered within this region. Electrophoretic mobility shift assays demonstrated that Sp1 and Sp3 bind to three sites in the promoter region of the mouse AP-2gamma gene. Combined mutation of the three putative Sp sites reduced promoter activity by 80% in trophoblast and nontrophoblast cells, demonstrating the functional importance of these sites in regulating AP-2gamma gene expression. In summary, we have identified a potential trophoblast cell-specific regulatory element located approximately 6 kb upstream of the murine AP-2gamma gene transcription start site, and we have shown that Sp1 and Sp3 bind to cis-regulatory elements located in the promoter proximal region and contribute to basal promoter activity.