The role of annexin 1 (Ax 1) in cell differentiation was studied in the A 549 epithelial cell line, a human lung adenocarcinoma line, that responds to phorbol esters and glucocorticoids by induction of differentiated properties. Ax 1 has also been reported to be involved in the control of cell proliferation. We report that Ax 1 synthesis occurs upon phorbol 12-myristate 13-acetate (PMA) treatment of A 549 cells and its appearance is correlated with the presence of dipeptidyl peptidase IV, or CD26, a marker of epithelial cell differentiation. In addition, using transfection experiments and site-directed mutagenesis with the Ax 1 promoter coupled to a reporter gene, we report that a unique region of the Ax 1 promoter confers the response of the reporter gene to PMA and dexamethasone. This response to PMA and/or dexamethasone involves the induction of the synthesis and/or the activity of trans/cis-activating transcriptional factors. Furthermore, we have delineated the mechanism of the transcriptional activation of Ax 1 by PMA and the involvement of a specific transcription factor, nuclear factor interleukin 6 (C/EBP beta).