The phenotypic modulation of vascular smooth muscle cells (VSMC) plays a central role in the pathogenesis of arteriosclerosis. Aortic preferentially expressed gene-1 (APEG-1), a VSMC-specific gene, is expressed highly in differentiated but not in dedifferentiated VSMC. Previously, we identified an E-box element in the mouse APEG-1 proximal promoter, which is essential for VSMC reporter activity. In this study, we investigated the role of upstream stimulatory factors (USF) in the regulation of APEG-1 transcription via this E-box element. By electrophoretic mobility shift assays, recombinant USF1 and USF2 homo- and heterodimers bound specifically to the APEG-1 E-box. Nuclear extracts prepared from primary cultures of rat aortic smooth muscle cells exhibited specific USF1 and USF2 binding to the APEG-1 E-box. To investigate the binding properties of USF during VSMC differentiation, nuclear extracts were prepared from the neural crest cell line, MONC-1, which differentiates into VSMC in culture. Maximal USF1 and USF2 protein levels and binding to the APEG-1 E-box occurred 3 h after the differentiation of MONC-1 cells was initiated. Co-transfection experiments demonstrated that dominant negative USF repressed APEG-1 promoter activity, and USF1, but not USF2, transactivated the APEG-1 promoter. Our studies demonstrate that USF factors contribute to the regulation of APEG-1 expression and may influence the differentiation of VSMC.