Interstitial collagenases participate in the remodeling of skeletal matrix and are regulated by fibroblast growth factor (FGF). A 0.2-kb fragment of the proximal human interstitial collagenase [matrix metalloproteinase (MMP1)] promoter conveys 4- to 8-fold induction of a luciferase reporter in response to FGF2 in MC3T3-E1 osteoblasts. By 5'deletion, this response maps to nucleotides -100 to -50 relative to the transcription initiation site. The 63- bp MMP1 promoter fragment -123 to -61 confers this FGF2 response on the rous sarcoma virus minimal promoter. Intact Eta and AP1 cognates in this element are both required for responsiveness. The AP1 site supports basal and FGF-inducible promoter activity. The intact Eta cognate represses basal transcriptional activity in both heterologous and native promoter contexts and is also required for FGF activation. FGF2 up-regulates a DNA-binding activity that recognizes the MMP1 AP1 cognate and contains immunoreactive Fra1 and c-Jun. Both constitutive and FGF-inducible DNA-binding activities are present in MC3T3-E1 cells that recognize the MMP1 Eta cognate; prototypic Eta transcriptional activators are not present in these complexes. Inhibitors of protein kinase C, phosphatidyl inositol 3-OH kinase, and calmodulin- dependent protein kinase do not attenuate MMP1 promoter activation. FGF2 activates ERK1/ERK2 signaling in osteoblasts; however, 25 μM MAPK-ERK kinase (MEK) inhibitor PD98059 (inhibits by > 85% the phosphorylation of ERK1/ERK2) has no effect on MMP1 promoter activation by FGF2. Ligand-activated and constitutively active FGF receptors initiate MMP1 induction. Dominant negative Ras abrogates MMP1 induction by constitutively active FGFR2-ROS, but dominant negative Rho and Rac do not inhibit induction. The mitogen-activated protein kinase (MAPK) phosphatase MKP2 [inactivates extra-cellular regulated kinase (ERK) = Jun N-terminal kinase (JNK) > p38 MAPK] completely abrogates MMP1 activation, whereas PAC1 (inactivates ERK = p38 > JNK) attenuates but does not completely prevent induction. Thus, a Ras- and MKP2-regulated MAPK pathway, independent of ERK1/ERK2 MAPK activity, mediates FGF2 transcriptional activation of MMP1 in MC3T3-E1 osteoblasts, converging upon the bipartite Ets-AP1 element. The DNA-protein interactions and signal cascades mediating FGF induction of the MMP1 promoter are distinct from two other recently described FGF response elements: the MMP1 promoter (-123 to - 61) represents a third FGF-activated transcriptional unit.