CCAAT/enhancer-binding proteins (C/EBP) are critical determinants for cellular differentiation and cell type-specific gene expression. Their functional roles in osteoblast development have not been determined. We addressed a key component of the mechanisms by which C/EBP factors regulate transcription of a tissue-specific gene during osteoblast differentiation. Expression of both C/EBPβ and C/EBPδ increases from the growth to maturation developmental stages and, like the bone-specific osteocalcin (OC) gene, is also stimulated 3-6-fold by vitamin D3, a regulator of osteoblast differentiation. We characterized a C/EBP enhancer element in the proximal promoter of the rat osteocalcin gene, which resides in close proximity to a Runx2 (Cbfa1) element, essential for tissue-specific activation. We find that C/EBP and Runx2 factors interact together in a synergistic manner to enhance OC transcription (35-40-fold) in cell culture systems. We show by mutational analysis that this synergism is mediated through the C/EBP-responsive element in the OC promoter and by a direct interaction between Runx2 and C/EBPβ. Furthermore, we have mapped a domain in Runx2 necessary for this interaction by immunoprecipitation. A Runx2 mutant lacking this interaction domain does not exhibit functional synergism. We conclude that, in addition to Runx2 DNA binding functions, Runx2 can also form a protein complex at C/EBP sites to regulate transcription. Taken together, our findings indicate that C/EBP is a principal transactivator of the OC gene and the synergism with Runx2 suggests that a combinatorial interaction of these factors is a principal mechanism for regulating tissue-specific expression during osteoblast differentiation.