NKX2.1 is a member of the NK2 family of homeodomain-containing transcription factors whose targeted disruption in mouse results in the absence of thyroid tissue and a severely abnormal lung phenotype. Little is known regarding the mechanisms that control tissue and temporal specificity of Nkx2.1 gene expression. The Nkx2.1 gene has been cloned from a number of species and it is composed of three exons and two introns. Two distinct DNA domains located 5' of exon I and within intron I have been found to exhibit promoter activity in lung and thyroid cells. In the current study we used deletional analysis of the 5' flanking region of exon I and identified a 300 bp TATA-less region that exhibits significant promoter activity in H441 cells. The DNA sequence of this region contains multiple palindromes, composed of G/C-rich elements. DNase I footprinting demonstrates that this promoter region interacts with nuclear factors present in H441 cells. In particular electrophoretic mobility shift assay using antibodies against the Sp family members show that both Sp1 and Sp3 as well as an as yet unknown H441-specific factor interact with the palindromic structure within this promoter region. Co-transfection studies show that this promoter region responds to Sp1 and Sp3 and mutations therein result in a significantly diminished response to these transcriptional factors. Therefore, we have identified a novel DNA structure on the Nkx2.1 gene which participates in transcription of this gene in pulmonary epithelial cells by Sp1 and Sp3 transcription factors.