Acting in cis with the beta-globin locus control region, the CAAT box of the beta-globin gene promoter stimulates transcription 10-fold in murine erythroleukemia (MEL) cells but is without effect in K562 cells. Our previous studies suggested that of four proteins from MEL cells that bind to this CAAT box region (CP1, GATA-1, and two factors that were denoted DSFr and DSF1) DSFr is involved in the up-regulation of transcription. In the present report, the DSFr protein in MEL cells was identified as C/EBPgamma through expression cloning and antibody studies. C/EBPgamma DNA binding activity could not be detected in K562 cells. However, K562 cells, but not MEL cells, were found to express LIP, which is a truncated form of C/EBPbeta and is an inhibitor of transcription. Thus, the differential expression of C/EBP members could account for the ability of the beta-globin CAAT box to stimulate transcription in MEL cells, but not function in K562 cells. Juxtaposing a specific C/EBP binding sequence next to the beta-globin promoter, in constructs in which the CAAT box had been rendered inactive by mutation or deletion, restored full promoter activity in MEL cells only if CP1 still bound to the promoter. In conjunction with previous mutation analyses, these results suggest that C/EBPgamma may collaborate with CP1 to enhance transcription through the beta-globin CAAT box.