Basic helix-loop-helix (bHLH) proteins regulate transcription from the E box sequence (5'-CANNTG-3') located in the regulatory region of most gene promoters. The rat enhancer of split- and hairy-related protein 2 (SHARP-2) is a member of the bHLH protein family. To analyze the possible role of SHARP-2 in the rat ovary, the regulation of the expression of the SHARP-2 gene was examined, and the SHARP-2 protein was characterized. Northern blot analysis revealed that the level of SHARP-2 mRNA abruptly and temporarily increases as the result of the action of LH, i.e., eCG or hCG treatment alone or hCG after eCG treatment, in the rat ovary, as indicated by the treatment of primary cultured rat granulosa cells with hCG after FSH treatment or of mouse Leydig MA-10 cells with hCG or 8-bromoadenosine 3',5'-cyclic monophosphate. An in situ hybridization analysis showed that eCG treatment increases the level of the SHARP-2 transcript in theca interna cells and that hCG treatment, after the administration of eCG, increases the level of the SHARP-2 transcript in granulosa cells. Furthermore, transfection experiments with green fluorescence protein (GFP) expression vectors into primary cultured granulosa cells and MA-10 cells revealed that the entire coding sequence of SHARP-2 fused to the GFP is localized in the nucleus. The transcriptional activity of SHARP-2 also was examined using transient DNA transfection experiments. When an expression vector encoding the full length of SHARP-2 was cotransfected with thymidine kinase promoter-luciferase reporter plasmids, with or without E box sequences, into MA-10 cells, the luciferase activity was decreased in an E box-dependent manner. We conclude that the level of SHARP-2 mRNA is regulated by gonadotropins and that SHARP-2 functions as a transcriptional repressor localized in the nucleus.