Differentiation of erythroid cells is regulated by cell signaling pathways including those that change the intracellular concentration of calcium. Calcium-dependent proteases have been shown previously to process and regulate the activity of specific transcription factors. We show here that the protein levels of upstream stimulatory factor (USF) increase during differentiation of murine erythroleukemia (MEL) cells. USF was subject to degradation by the Ca(2+)-dependent protease m-calpain in undifferentiated but not in differentiated MEL cells. Treatment of MEL cells with the specific calpain inhibitor calpeptin increased the levels of USF and strongly induced expression of the adult alpha- and beta-globin genes. The induction of globin gene expression was associated with an increase in the association of USF and RNA po ly mer ase II with regulatory elements of the beta-globin gene locus. Calpeptin also induced high level alpha- and beta-globin gene expression in primary CD71-positive erythroid progenitor cells. The combined data suggest that inhibition of calpain activity is required for erythroid differentiation-associated increase in globin gene expression.