Runx2 and Sp7 transcription factors are essential for skeletogenesis. Targeted deletion of either gene results in failure of osteoblast differentiation and bone formation. Loss of bone-matrix gene expression is surprisingly similar in Sp7 and Runx2 null mice. The molecular mechanisms responsible for similar transcriptional regulation of target genes remain largely unknown. Here, we demonstrate that Runx2 and Sp7 interact physically and functionally. Both proteins are co-expressed in osteoblastic cells. We first characterized a panel of Sp7 antibodies and demonstrate that majority of the published antibodies do not recognize Sp7 protein. Co-immunoprecipitation studies revealed that endogenous Runx2 protein physically interacts with Sp7 protein. We identified that runt homology domain (RHD) of Runx2 protein is involved in physical association with Sp7. Functional consequences of Runx2-Sp7 physical interaction was then assessed by promoter-reporter assays. We selected promoters of osteocalcin (OC), a marker of mature osteoblast and fibroblast growth factor 3 (FGF3), a signaling molecule that determine the fate of embryonic ecto-mesenchyme. Runx2 and Sp7 stimulate OC-promoter activity by 3-folds in epithelial cells. However, when both proteins were co-expressed, a dose-dependent synergistic activation of 22-folds was noted. Similar pattern of synergistic activation of OC-promoter was noted in mesenchymal cell. FGF3 promoter was activated by 25 - and 30-folds with Runx2 and Sp7 respectively. Again a dose-dependent synergistic activation of 130-folds was evident when Runx2 and Sp7 were co-expressed in epithelial cells. Synergistic activation of FGF3 promoter was also noted in mesenchymal cells. Together, our data demonstrated that Runx2-Sp7 molecular complex functionally cooperate for maximal induction of cell-phenotype-restricted genes. © 2014 Informa Healthcare USA, Inc.