PTH is a major regulator of calcium homeostasis by mobilizing calcium through bone resorption. We show that the expression of collagenase-3 (MMP-13), a member of the family of matrix metalloproteinases, required for the cleavage of collagens in the bone, is increased upon PTH injection in mice. A cis-acting element in the collagenase-3 promoter was identified which, together with AP-1, is required for induction by PTH. This element contains CCACA motifs which are required for binding of the 65 kDa osteoblast-specific splice variant of Cbfa1. Introduction of mutations in this binding site that interfere with protein interaction also eliminates PTH inducibilty and transactivation by Cbfa/Runt proteins. While DNA binding activity of AP-1 is increased upon PTH treatment, high basal level of Cbfa/Runt binding activity is detectable in untreated cells which is not further increased by PTH, suggesting that AP-1 and Cbfa1 contribute to transcriptional activation through different mechanisms. In agreement with the critical role of both proteins defined in tissue culture cells, expression of collagenase-3 is reduced in mice lacking c-fos and is completely absent in cbfa1−/− embryos. These data provide the first evidence for a critical role of Cbfa1, a major regulator of bone development, in PTH-dependent processes such as bone resorption.