Proximal spinal muscular atrophy (SMA) is an autosomal recessive disease characterized by degeneration of alpha-motor neurons and muscular atrophy. The causal survival motor neuron (SMN) gene maps to a complex region of chromosome 5q13 harbouring an inverted duplication. Thus, there are two SMN genes, SMN1 and SMN2, but SMN1-deficiency alone causes SMA. In this study we demonstrate, for the first time, down-regulation of SMN promoter activity during cellular differentiation. Specifically, the minimal SMN promoter is four times more active in undifferentiated embryonal carcinoma P19 cells compared to cells treated with retinoic acid (RA) to initiate neuronal differentiation. This effect is mediated by sequences contained within the minimal core promoter that we have confined to the 257 nucleotides upstream of exon 1. We have identified seven regions that are highly conserved between the mouse and human SMN core promoters and this region contains the consensus sequence for a number of transcription factors. Most notably, AhR, HNF-3 and N-Oct3 have already been shown to respond to RA treatment of EC cells, while E47, HNF-3, MAZ, N-Oct3 and Pit-1a have been implicated in embryonic, muscle or neural development. In addition, we have mapped two strong transcription initiation sites upstream of SMN exon 1. The novel -79 site identified in this study is preferentially utilized during human foetal development. Furthermore, analysis of RNA from SMA patients with deletions of the entire SMN1 gene or chimpanzees that lack SMN2 suggests that the level of transcription initiation at these sites may be different for the SMN1 and SMN2 genes. Taken together, this work provides the first demonstration of transcriptional regulation of these genes during cellular differentiation and development. Deciphering the underlying mechanisms responsible for regulating SMN transcription may provide important clues towards enhancing SMN2 gene expression, one target for the treatment of SMA.