Transcription factor CCAAT/enhancer-binding protein beta (C/EBPbeta) plays an important role in hormone-dependent gene expression. In osteoblasts C/EBPbeta can increase insulin-like growth factor I (IGF-I) transcription following treatment with hormones that activate protein kinase A, but little is known as yet about the expression of C/EBPbeta itself in these cells. We initially showed that prostaglandin E2 (PGE2) rapidly enhances C/EBPbeta mRNA and protein expression, and in this study we identified a 3'-proximal region of the C/EBPbeta promoter containing a 541-bp upstream sequence that could account for this effect. PGE2-dependent activation of C/EBPbeta was blocked by expression of a mutated regulatory subunit of protein kinase A or by mutation of two previously identified cAMP-sensitive cis-acting regulatory elements within the promoter between bp -111 and -61. Nuclear protein binding to these elements was induced by PGE2, required new protein synthesis, and was sensitive to antibody to the transcription factor termed Fos-related antigen 2 (Fra-2). Fra-2 cDNA generated from rat osteoblasts by reverse transcriptase PCR was 95% homologous to human Fra-2, and PGE2 rapidly induced Fra-2 mRNA and protein expression. Consistent with these findings, over-expression of Fra-2 significantly increased C/EBPbeta promoter activity in PGE2-induced osteoblasts, whereas expression of Fra-2 lacking its activation domain had a dominant negative inhibitory effect. Together, these results reveal a significant, hormone-dependent role for Fra-2 in osteoblast function, both directly, through its ability to increase new C/EBPbeta gene expression, and indirectly, through downstream C/EBP sensitive genes.