Expression of the transglutaminase type1 gene (TGM1), which encodes an epithelial cell-specific protein cross-linking enzyme, is limited to particular stages of epidermal development and keratinocyte differentiation. As a result, transglutaminase type 1 (TGase1) enzyme activity in epidermal cells increases with the onset of keratinization in vivo and in vitro. We determined, by functional mapping of deletion mutations in the TGM1 5' untranslated region, that an element in first intron of the human TGM1 gene, in addition to the 5' proximal promoter, initiates transcription and upregulates transcriptional activity. These two transcription control elements function interdependently to regulate the expression of the human TGM1 gene in keratinocytes. We also identified distinct regulatory elements that cooperatively modify the 5' proximal and intron 1 promoter activities in response to environmental variations in retinoic acid and calcium ion concentrations. In conclusion, we report that TGM1 differential gene expression is controlled by two distinct elements, proximal and intronic, which function cooperatively to initiate and modulate TGM1 gene transcription in response to regulatory signals. We propose that in nonexpressing cells these regulatory signals repress a default mechanism that operates in their absence. The specificity of their function is integrated into the default mechanism and consists of the tissue-, developmental-, and differentiation-specific interplay of 5' URR and intron 1 elements tuned to physiological status.