The CG beta-subunit gene (CGbeta) arose evolutionarily from the LH beta-subunit gene (LHbeta) through gene duplication. Although the promoter sequences of the CGbeta and human (h) hLHbeta genes are greater than 90% homologous, their expression patterns are distinct. LHbeta is expressed in pituitary gonadotrope cells and CGbeta is expressed in placental trophoblast cells. The placental specific and cAMP-inducible region within the CGbeta promoter has been mapped to a complex enhancer element spanning 118 bp (-318 to -200). Transcription factor-binding sites within this enhancer have been partially characterized and include multiple binding sites for AP-2 (activating protein 2) and Sp1 (selective promoter factor 1), which activate basal and cAMP-induced expression. In this study, we performed a detailed analysis of the recognition sites for these transcription factors and examined the functional roles of these elements in the control of CGbeta expression. An upstream Sp1/AP-2 binding site (-318 to -279) preferentially binds Sp1, which occludes AP-2 binding to an adjacent site. In contrast, both Sp1 and AP-2 bind concurrently to a downstream composite Sp1/AP-2 element (-220 to -188). Functionally, mutations in any of the Sp1 or AP-2 binding sites cause a progressive decrease in basal CGbeta expression. However, cAMP stimulation of the CGbeta promoter is reduced by AP-2 mutations, whereas Sp1 mutations enhance cAMP activation. We conclude that multiple AP-2 and Sp1 elements are required to maintain basal CGbeta promoter activity, but these factors have opposing effects on cAMP regulation, which is mediated primarily by AP-2.