Transformation of chick embryo fibroblasts by the v-Jun oncoprotein correlates with a downregulation of the extracellular matrix protein SPARC and repression of the corresponding mRNA. Repression of SPARC contributes to the oncogenic process by facilitating tumor development in vivo. A proximal promoter fragment, designated -124/+16, is responsible for high constitutive activity of the SPARC gene and is the target of repression by v-Jun. In this paper, using electrophoretic mobility shift and pull-down assays in vitro, and transient transfections and chromatin immunoprecipitation assays in Sp1/3-deficient Drosophila SL2 cells and in chick embryo fibroblasts, we show that (i) Sp1 and/or Sp3 is required for constitutive activation of SPARC transcription, by binding directly to the GGA-rich -92/-57 fragment; and (ii) v-Jun does not bind -124/+16 directly, but binds to the GGA-rich fragment indirectly, most likely through a physical interaction with Sp1/3. Moreover, a transactivation-proficient v-Jun derivative, designated v-Jun/cebp/glz, which cannot bind Jun DNA motifs anymore and cannot heterodimerize, is still capable of downregulating SPARC efficiently. Taken together, these data strongly suggest that v-Jun downregulates SPARC through the formation of a DNA-Sp1/3-v-Jun, chromatin-associated complex.