The conversion of stromal. fibroblasts into contractile myofibroblasts is an essential feature of the wound-healing response that is mediated by transforming growth factor beta1 (TGF-beta1) and accompanied by transient activation of the vascular smooth muscle -actin (SmalphaA) gene. Multiple positive-regulatory elements were identified as essential mediators of basal Smalpha-A enhancer activity in mouse AKR-2B stromal fibroblasts. Three of these elements bind transcriptional activating proteins of known identity in fibroblasts. A fourth site, shown previously to be susceptible to single-strand modifying agents in myofibroblasts, was additionally required for enhancer response to TGF-beta1. However, TGF-beta1 activation was not accompanied by a stoichiometric increase in protein binding to any known positive element in the SmaA enhancer. By using oligonucleotide affinity isolation, DNA-binding site competition, gel mobility shift assays, and protein overexpression in SL2 and COS7 cells, we demonstrate that the transcription factors Sp1 and Sp3 can stimulate Sma-A enhancer activity. One of the sites that bind Sp1/3 corresponds to the region of the SmaA enhancer required for TGF-beta1 amplification. Additionally, the TGF-beta1 receptor-regulated Smad proteins, in particular Smad3, are rate-limiting for SmaA enhancer activation. Whereas Smad proteins collaborate with Sp1 in activating several stromal cell-associated promoters, they appear to operate independently from the Sp1/3 proteins in activating the SmaA enhancer. The identification of Sp and Smad proteins as essential, independent activators of the SmaA enhancer provides new insight into the poorly understood process of myofibroblast differentiation.