Transformation of rat thyroid cells with polyoma virus middle T antigen results in loss of the thyroid-differentiated phenotype, measured as the expression of the thyroglobulin (Tg), thyroperoxidase (TPO), and sodium͞iodide symporter (NIS) genes. Among the transcription factors involved in the regulation of these genes, TTF-1 and TTF-2 were still detected at nearly wild-type levels, while a specific loss of the paired domain transcription factor Pax8 was observed. In this study, we used the PCPy cell line as a model system to study the role of Pax8 in thyroid differentiation. We demonstrate that the reintroduction of Pax8 in PCPy cells is sufficient to activate expression of the endogenous genes encoding thyroglobulin, thyroperoxidase, and sodium͞iodide symporter. Thus, this cell system provides direct evidence for the ability of Pax8 to activate transcription of thyroid-specific genes at their chromosomal locus and strongly suggests a fundamental role of this transcription factor in the maintenance of functional differentiation in thyroid cells. Moreover, we show that Pax8 and TTF-1 cooperate in the activation of the thyroglobulin promoter and that additional thyroid-specific mechanism(s) are involved in such a cooperation. To identify the Pax8 domain able to mediate the specific activation of the thyroglobulin promoter, we transfected in PCPy cells three different Pax8 isoforms. The results of such experiments indicate that for the transcriptional activation of thyroid-specific genes, Pax8 uses an as yet unidentified functional domain.Pax genes ͉ gene expression T erminally differentiated cells express genes whose products are undetectable in other cell types. The isolation of regulatory DNA sequences responsible for such cell-type-specific expression and the cloning of the cDNAs encoding cognate transcription factors revealed, in the majority of cases, that a combination of transcription factors is unique to a cell type. Thus, transcription of cell-type-specific genes appears to depend on synergy between transcription factors (1, 2). Frequently, transcription factors controlling the expression of genes specific to the terminal differentiation state of a given cell type play an additional role earlier in the development of the same cell type. As a consequence, the identification of factors controlling cell-type-specific gene expression also provides relevant information on earlier developmental stages in many organs and cell lineages. However, a direct assessment of the role of many transcription factors in cell-type-specific gene expression has proven difficult, given that mice lacking the relevant transcription factors often show complete absence of the implicated cell type.To elucidate the mechanism(s) operating in the establishment and maintenance of cell-type-specific expression, we have been studying a model system represented by the thyroid follicular cells, the most abundant cell population of the thyroid gland. These cells are responsible for thyroid hormone synthesis and are characterized by the expr...