Cartilage-derived retinoic acid-sensitive protein (CD-RAP) is a secreted protein expressed by chondrocytes; the expression is repressed by interleukin 1 (IL-1). To investigate the transcriptional mechanism, by which CD-RAP expression is suppressed by IL-1, deletion constructs of the mouse CD-RAP promoter were transfected into rat chondrocytes treated with or without IL-1. The results revealed an IL-1-responsive element located between ؊2138 and ؊2068 bp. As this element contains a CAAT/enhancer-binding protein (C/EBP) motif, the function of C/EBP and C/EBP␦ was examined. IL-1 stimulated the expression of C/EBP and -␦, and the direct binding of C/EBP to the C/EBP motif was confirmed. The ؊2251-bp CD-RAP promoter activity was down-regulated by co-transfection with C/EBP expression vectors. Mutation of the C/EBP motif abolished the inhibitory response to IL-1. Additionally, C/EBP expression vectors were found to down-regulate the construct containing the promoter and enhancer of the type II collagen gene. Finally, the enhancer factor, Sox9, was shown to bind adjacent to the C/EBP site competing with C/EBP binding. Taken together, these results suggest that C/EBP and -␦ may play an important role in the IL-1-induced repression of cartilage-specific proteins and that expression of matrix proteins will be influenced by the availability of positive and negative trans-acting factors.