Secreted frizzled-related protein 2 (Sfrp2) is highly expressed in developing limbs and is associated with skeletal malformation such as Brachydactyly and Syndactyly. However, the mechanism by which Sfrp2 gene was transcriptionally regulated in chondrogenic cells is largely unknown. Here, we found that sterol regulatory element binding protein-1 (SREBP-1) regulated transcriptional activation of the Sfrp2 gene in chondrogenic cells. Overexpression of SREBP-1 led to stimulation of Sfrp2 promoter activity and increase of Sfrp2 mRNA in chondrogenic ATDC5 cells. Reporter gene assays using deleted Sfrp2 promoter constructs showed that the position between -1150 and -840 is required for SREBP-1-mediated Sfrp2 promoter activity. Mutagenesis analysis showed that the SREBP-1-binding site at nucleotide -935 to -926 is a functional motif for Sfrp2 transcription. Promoter enzyme immunoassay and chromatin immunoprecipitation assay demonstrated that SREBP-1 binds directly to the SREBP-1-binding motif in the mouse Sfrp2 promoter. Thus, these results demonstrated that SREBP-1 acts as a positive regulator of Sfrp2 transcription in chondrogenic cells.