Previous studies demonstrated that differentiation of mouse embryonal carcinoma cells leads to transcriptional up-regulation of the mouse type II transforming growth factor-beta receptor (mTbetaR-II) gene. To elucidate the molecular mechanisms regulating transcription of this gene, we isolated the 5'-flanking region of the mTbetaR-II gene and characterized its expression in F9-differentiated cells. Analysis of mTbetaR-II promoter/reporter gene constructs demonstrates that two conserved Ets-binding sites play an important role in the activity of the mTbetaR-II promoter. Importantly, we present evidence that mElf-3, a member of the Ets family, plays a key role in the activation of the mTbetaR-II promoter. Northern blot analysis reveals that the steady-state levels of mTbetaR-II mRNA increase in parallel with those of mElf-3 mRNA during the differentiation of F9 embryonal carcinoma cells. We also demonstrate that mElf-3 contains one or more domains that influence its binding to DNA. Finally, we report that a single amino acid substitution in the transactivation domain of mElf-3 reduces its ability to transactivate and elevates its steady-state levels of expression. In conclusion, our data argue that mElf-3 plays a key role in the regulation of the mTbetaR-II gene, and Elf-3 itself is regulated at multiple levels.