Giucocorticoids are potent inhibitors of coiiagenase induction by phorbol esters and inflammatory mediators. The target for this negatlve effect is the AP1 site within the coiiagenase promoter, which also mediates its induction. Negative regulation is due to repression of APl activity by the giucocorticoid receptor (GCR). While the GCR is a potent inhibitor of AP-1 activity (JunlFos), both c&n and c-F08 are potent repressors of GCR activity. in vitro experiments using purified GCR and c&n proteins suggest that mutual repression is due to direct interaction between the two. Direct interaction between OCR and either cJun or c-Fos is demonstrated by cross-linking and coimmunoprecipltation. These findings reveal a cross talk between two major signal transduction systems used to control gene transcription in response to extracellular stimuli, and a novel mechanism for transcriptional repression.