We previously described an osteocalcin (OC) fibroblast growth factor (FGF) response element (FRE) DNA binding activity as a target of Msx2 transcriptional regulation. We now identify Ku70, Ku80, and Tbdn100, a variant of Tubedown-1, as constituents of the purified OCFRE-binding complex. Northern and Western blot analyses demonstrate expression of Ku and Tbdn100 in MC3T3E1 osteoblasts. FGF2 treatment regulates Ku, but not Tbdn100, protein accumulation. Gel supershift studies confirm sequence-specific DNA binding of Ku in the OCFRE complex; chromatin immunoprecipitation assays confirm association of Ku and Tbdn100 with the endogenous OC promoter. In the promoter region ؊154 to ؊113, the OCFRE is juxtaposed to OSE2, an osteoblast-specific element that binds Runx2 (Osf2, Cbfa1 (14), key features of OC promoter regulation are remarkably well conserved across mammalian species (3). The osteoblast homeoprotein Msx2 plays a crucial role in the regulation of osteoblast proliferation and differentiation (15). Msx2 and Msx1 are absolutely required for craniofacial bone formation (15). Msx2 controls the timing of osteoblast differentiation, including the temporospatial patterns of OC expression in the calvarium and teeth (12, 16). Msx2 plays a global role in determination of skeletal mass, elegantly demonstrated in murine genetic models; moreover, as highlighted by Maas and colleagues (15), osteogenic effects during development are dependent upon Msx gene dosage, suggesting that stoichiometry is an important feature of Msx2 action. Consistent with this, we (11, 12, 16 -18) and others (2, 19) have shown that Msx2 and Msx1 participate in specific protein-protein interactions that control gene transcription. In the rat OC gene, transcriptional regulation by Msx2 converges on a 42-bp region at nucleotides Ϫ154 to Ϫ113 relative to the transcription initiation site, encompassing an FGF responsive element at nucleotides Ϫ142 to Ϫ136 (17). The OCFRE (OC FGF response element) is a GCAGTCA motif that confers both basal and FGF2-regulated expression of the OC gene in MC3T3E1 calvarial osteoblasts (17,20,21). A DNA binding activity up-regulated by FGF2 in MC3T3E1 cells recognizes this element and is constitutively expressed by MG63 osteosarcoma cells (17,20). Msx2 exerts suppressive actions on the OC promoter in part by inhibiting the OCFRE DNA binding activity present in either MC3T3E1 cells or purified from MG63 cells (17). By contrast, Msx2 does not alter vitamin D receptor-dependent transcription or vitamin D receptor binding to its DNA cognate (17). Inhibition of OCFRE activity is dependent upon key regulatory domains encoded in the Msx2 homeodomain NH 2 -terminal arm and