We have previously shown that parathyroid hormone (PTH) stimulates the expression of insulin-like growth factor binding protein-5 (IGFBP-5) transcript levels in the osteosarcoma cell-line, UMR106-01 cells. In the present study we examined the molecular basis for the PTH induction of IGFBP-5 mRNA in these cells. PTH had no effect on the half-life of the IGFBP-5 transcript but did stimulate the transactivation of the proximal 889 base pairs of the rat IGFBP 5' flanking region in a luciferase fusion construct, suggesting that PTH stimulates transcript levels through transcriptional mechanisms. Progressive 5' deletions to -59 base pairs of the proximal promoter region had no effect on PTH induction of transactivation, indicating that an element existed within the first -59 base pairs upstream of the transcription start site that was responsive to PTH. Within the -59 base pairs there are CCAAT/enhancer binding protein (C/EBP), E-box, nuclear factor-1 (NF-1) and activator protein-2 (AP-2) elements. Mutation of the C/EBP, E-box or NF-1 elements had no effect on the ability of PTH to induce the transactivation of the IGFBP-5 promoter. Mutation of the AP-2 element resulted in a 40% reduction of PTH-stimulated luciferase activity. When three tandem repeats of the AP-2 consensus sequence were fused to a luciferase reporter, PTH stimulated a 25% increase in reporter activity. Electrophoretic mobility shift assays using UMR106-01 cell nuclear extracts showed that PTH caused a prominent shifted band in a probe spanning the region containing all four elements. The shifted band was almost completely absent when the probe contained a mutated AP-2 element. These results suggest that the AP-2 element functions in the PTH induction of IGFBP-5 gene expression.