In the present study we establish that specific members of the Sp1 family of transcription factors (Sp1 and Sp3) bind to all six GC-rich motifs (elements 1-6) present in the proximal promoter of the human cell cycle inhibitor p21(WAF-1/Cip1) gene. Competition analysis showed that Sp1 and Sp3 bound with high affinity to elements 1, 3, 4, and 5/6 and with lower affinity to element 2. Transfection experiments in the Sp1-deficient Drosophila SL2 cells established that Sp1 and Sp3 but not Sp2 are potent transactivators of the p21 promoter. Transactivation by Sp1 was compromised either by deletion of element 1 (-119/-114) or by using a truncated Sp1 form lacking the C-terminal regulatory domain D. Point mutagenesis of the -2325/+8 p21 promoter, targeting individual elements 1-6, showed that mutations in element 3 (-82/-77) caused a dramatic reduction (90%) in p21 promoter activity whereas mutations in other elements had a less severe effect. The mutations in element 3 abolished p21 promoter induction by upstream enhancer elements in HepG2 cells. Sp1, but not Sp3, mediated the transactivation of the p21 promoter by the TGFbeta signaling mediator Smad3 and Smad4 proteins whereas none of the individual mutations in elements 1-6 affected the transactivation of the p21 promoter by Smad proteins in HepG2 cells. Our results suggest that functional interactions between Sp1 family members bound to specific elements of the proximal promoter and factors bound to distal enhancer elements govern the hepatic activity of the human p21 promoter under basal or inducible conditions.