We have previously shown that transforming growth factor-beta (TGF-beta) increases type VII collagen gene (COL7A1) expression in human dermal fibroblasts in culture (Mauviel, A., Lapière, J.-C., Halcin, C., Evans, C. H., and Uitto, J. (1994) J. Biol. Chem. 269, 25-28). To gain insight into the molecular mechanisms underlying the up-regulation of COL7A1 by this growth factor, we performed transient cell transfections with a series of 5'-deletion promoter/chloramphenicol acetyltransferase reporter gene constructs. We identified a 68-base pair region between nucleotides -524 and -456, relative to the transcription start site, as critical for TGF-beta response. Using electrophoresis mobility shift assays (EMSAs) with an oligonucleotide spanning the region from -524 to -444, we discovered that a TGF-beta-specific protein-DNA complex was formed as early as 11 min after TGF-beta stimulation and persisted for 1 h after addition of the growth factor. Deletion analysis of the TGF-betaresponsive region of the COL7A1 promoter by EMSA identified segment -496/-444 as the minimal fragment capable of binding the TGF-beta-induced complex. Furthermore, two distinct segments, -496/-490 and -453/-444, appeared to be necessary for TGF-beta-induced DNA binding activity, suggesting a bipartite element. Supershift experiments with a pan-Smad antibody unambiguously identified the TGF-beta-induced complex as containing a Smad member. This is the first direct identification of binding of endogenous Smad proteins to regulatory sequences of a human gene.