Many ubiquitously expressed genes, including oncogenes, lack a proximal TATA or CAAT box but have a region of G+ C-rich sequences that appears to replace the usual promoter initiation site. The zinc-finger protein Sp1 is one of the prevalent activators of these genes. The Egr-1 zinc-finger protein has a similar binding site and if the two sites occur in the same region, a variety of activation or inhibitory responses may be obtained. We show that competition between the two factors for overlapping sites on growth-promoting genes could explain why the overexpression of Egr-1 suppresses transformed growth in a number of cell types [Huang et al.(1995): Cancer Res 55: 5054–5062; Huang et al.(1997): Int J Cancer]. We demonstrate here that Egr-1 and Sp1 can bind to the same G+ C-rich sites and that Egr-1 can displace Sp1 and hence inhibit its activity. We measured the responses of synthetic consensus binding sites and natural promoter sequences linked to a reporter gene and showed that Egr-1 inhibited the activation of transcription by Sp1 on overlapping Sp1/Egr-1 sites. In contrast, Sp1 activity could be augmented by Egr-1 at nonoverlapping sites in the Egr-1 gene promoter, in transient reporter gene studies in Drosophila SL2 cells. In addition, over-expression of exogenous Sp1 in mammalian cells, also leads to increased Egr-1 protein expression, which further inhibits Sp1 transactivation of numerous genes. Therefore, we can account for some of the complex responses of G+ C-rich enhancer/promoters by a form of “facilitated inhibition” of Sp1 by Egr-1 at overlapping sites. J. Cell. Biochem. 66: 489–499, 1997.© 1997 Wiley-Liss, Inc.