Activation of complement gene expression plays a major role in the response to antigenic challenge. The induction of complement synthesis occurs primarily in liver and in macrophages and is mediated, at least in part, by increased transcription of the complement genes. For example, transcription of the C4 complement gene, which plays a crucial role in the complement pathway, is induced in response to acute inflammation or tissue injury. Previous work has defined the elements present in the C4 complement gene promoter that are required for its expression. Particularly important is an E-box motif, E-C4, that is conserved between the mouse, human, and rat promoters and that directed up to 90% of transcription from the mouse C4 promoter. Here we have purified the E-C4-binding factor to homogeneity using a novel and rapid affinity purification procedure. Following N-terminal microsequencing and subsequent isolation of the corresponding cDNA, the factor binding the E-C4 element was identified as upstream stimulatory factor-1 (USF-1), a basic helix-loop-helix-leucine zipper transcription factor. We also show for the first time that in vivo USF-1 is a phosphoprotein, but that phosphorylation of USF-1 is severely reduced in cells in culture. Moreover, the phosphorylated form of USF-1 binds DNA preferentially, indicating that phosphorylation may enhance the ability of USF-1 to bind DNA. The implications of USF-1 phosphorylation for C4 complement gene expression and transcription regulation are discussed.