We have described previously a complex E-box enhancer (-147) of the vasopressin promoter in small-cell lung cancer (SCLC) extracts [Coulson, Fiskerstrand, Woll and Quinn, (1999) Biochem. J. 344, 961-970]. Upstream stimulatory factor (USF) heterodimers were one of the complexes binding to this site in vitro. We now report that USF overexpression in non-SCLC (NSCLC) cells can functionally activate vasopressin promoter-driven reporters that are otherwise inactive in this type of lung cancer cell. Site-directed mutagenesis and electrophoretic mobility-shift analysis demonstrate that although the -147 E-box contributes, none of the previously predicted E-boxes (-147, -135, -34) wholly account for this USF-mediated activation in NSCLC. 5' Deletion showed the key promoter region as -52 to +42; however, USF-2 binding was not reliant on the -34 E-box, but on a novel adjacent CACGGG non-canonical E-box at -42 (motif E). This mediated USF binding in both SCLC and USF-2-transfected NSCLC cells. Mutation of motif E or the non-canonical TATA box abolished activity, implying both are required for transcriptional initiation on overexpression of USF-2. Co-transfected dominant negative USF confirmed that binding was required through motif E for function, but that the classical activation domain of USF was not essential. USF-2 bound motif E with 10-fold lower affinity than the -147 E-box. In NSCLC, endogenous USF-2 expression is low, and this basal level appears to be insufficient to activate transcription of arginine vasopressin (AVP). In summary, we have demonstrated a novel mechanism for USF activation, which contributes to differential vasopressin expression in lung cancer.