Osteogenic protein-1 (OP-1), a member of the bone morphogenetic protein subfamily of the transforming growth factor-beta superfamily, induces new bone formation in vivo and regulates the expression of numerous growth factors. We previously showed that OP-1 down-regulates the transcription of the insulin-like growth factor-binding protein-5 (IGFBP-5) in primary cultures of fetal rat calvaria (FRC) cells. In the present study we identified, within the IGFBP-5 promoter, a 21-bp region that confers OP-1 responsiveness in FRC cells. Within this region lie three putative cis-acting regulatory elements, viz. a CAAT-like sequence, a CCAAT/enhancer-binding protein (C/EBPalpha)-like element, and a c-Myb or E-box-like motif. Mutations in the CAAT-like sequence reduced the promoter activity in both control and OP-1-treated cells, but did not abrogate the OP-1-induced down-regulation. Mutations in the C/EBPalpha-like element reduced the promoter activity in both control and OP-1-treated cells without significantly affecting the extent of down-regulation. Mutations in the putative c-Myb or E-box-like motif reduced the promoter activity in both the OP-1-treated and control cells and completely abolished the inhibitory effect of OP-1 on the IGFBP-5 promoter activity. Gel mobility shift analyses further showed specific interaction between nuclear protein(s) in FRC cells and the 21-bp region. OP-1 down-regulates the nuclear regulatory protein interaction with the 21-bp region by reducing either the cellular concentration of the regulatory protein(s) or the affinity of the regulatory protein(s) for the OP-1 responsive element. In conclusion, we identified an OP-1 response region in the rat IGFBP-5 promoter and further showed that OP-1 down-regulates the nuclear protein interaction with the response element(s).