Expression of the trophoblast-specific subunit of human chorionic gonadotropin, CGbeta, is associated with fusion of cytotrophoblasts into a multinuclear syncytium. Here, we studied regulation of the CGbeta5 gene in trophoblasts undergoing in vitro syncytialization. Transfection of luciferase reporters harboring different lengths of the CGbeta5 upstream sequence revealed that the proximal promoter region (-345 to +114) is sufficient to govern differentiation-dependent induction. Mutational analyses suggested that two selective promoter factor (Sp) and three activating protein 2 (AP-2) recognition sequences are necessary for full activity of the promoter. During syncytialization these elements interacted with increasing amounts of the transcription factors Sp1, Sp3, and AP-2alpha in electrophoretic mobility shift assay, but only AP-2alpha binding rose upon elevation of cAMP levels with forskolin. Increasing expression of different isoforms of Sp1 and Sp3 could also be detected by Western blot analyses. Sp1/Sp3 localized to syncytial nuclei both in differentiated cultures and in term placental tissue, suggesting assembly of functional transcriptional complexes. Costaining of the transcription factors with E-cadherin on term placental sections revealed that 47 and 33% of cytotrophoblast nuclei were negative for Sp1 and Sp3, respectively. In contrast, immunohistochemistry of early tissue demonstrated expression of Sp1 in the majority of cyto- and syncytiotrophoblasts, whereas Sp3 was absent from the syncytium. Sp1 and Sp3 induced wild-type/mutant promoter constructs upon transfection in Sp-deficient SL-2 cells, indicating that the Sp elements function as activating sequences. The data suggest that increasing concentrations of Sp1, Sp3, and AP-2alpha enhance transcription of CGbeta in differentiating term trophoblasts, whereas a different combination of factors may control expression in early placentas.