OBJECTIVE: To examine the signaling pathways leading to transforming growth factor-beta (TGF-beta) induced collagenase-3 production in human osteoarthritic (OA) chondrocytes, as well as the transcription factors and their binding sites involved in the transcriptional control of collagenase-3 gene. METHODS: Identification of the TGF-beta signaling pathway was by Western immunoblotting using specific antibodies for the phosphorylated forms of p44/42 and p38 MAPK, SAPK/JNK, and the Smad2 protein. Electromobility shift assays (EMSA) were carried out for activator protein- (AP-1), polyomavirus enhancer A (PEA-3), activin-response-element-like, Smad-binding-element-like, and TGF-beta inhibitory element oligonucleotides. Supershift assays using antibodies to the Jun, Fos, and Smad families of proteins were used for identification of transcription factors. Chondrocyte transfections were also performed using the -133CAT collagenase-3 promoter plasmid (containing PEA-3, AP-1, and TATA sites) and mutated AP-1 and PEA-3 sites. RESULTS: The primary target of TGF-beta induced collagenase-3 in OA chondrocytes was the Smad2 protein, with significant phosphorylation within 5 min. Contrasting with the Smad2, the untreated OA chondrocytes already had detectable levels of the phosphorylated forms of p38 and p44/42 MAPK. Of the oligonucleotides tested, EMSA revealed that TGF-beta treated OA chondrocyte proteins bound only to the AP-1 and PEA-3. Supershifts with the AP-1 oligonucleotide showed the presence of the Jun (c-Jun, JunB, JunD) and Fos (c-Fos, FosB, Fra-1, Fra-2) proteins in the untreated and TGF-beta treated OA chondrocytes, whereas only Smad proteins (Smad2, 3, 4) were present in the AP-1 binding proteins from the TGF-beta treated chondrocytes. The AP-1 mutation decreased both basal (95%) and TGF-beta induced (99%) collagenase-3 production, whereas the PEA-3 mutation decreased the basal (15%) but more significantly (50%) the TGF-beta induced transcription. CONCLUSION: Smad proteins are the main cytoplasmic signaling pathways in TGF-beta stimulated collagenase-3 in OA chondrocytes. The AP-1 site appears critical for upregulation of collagenase-3 production, but TGF-beta stimulation requires both AP-1 and PEA-3 sites for optimal response.