Keratins K5 and K14 are the hallmarks of mitotically active keratinocytes of stratified epithelia. They are transcribed at a high level and in a tissue-specific manner, enabling us to use the K14 gene to elucidate the regulatory mechanism underlying epidermis-specific transcription. We have identified four DNase I-hypersensitive sites (HSs) present in the 5′ regulatory sequences of the K14 gene under specific conditions where the gene is actively expressed. Two of these sites (HSsII and -III) are conserved in position and sequence within the human and mouse K14 genes. Using an in vivo transgenic approach and an in vitro keratinocyte culture approach, we have discovered that most of K14's transcriptional activity is restricted to a novel 700-bp regulatory domain encompassing these HSs. This enhancer is sufficient to confer epidermis-specific activity to a heterologous promoter in transfection assays in culture and in transgenic mice in vivo. A 125-bp DNA fragment encompassing HSsII harbors the majority of the transactivation activity in vitro, and electrophoretic mobility shift and mutational assays reveal a role for AP-1, ets, and AP-2 family members in orchestrating the keratinocyte-preferred expression of HSsII. The HSsII element also confers epidermal expressivity to a heterologous promoter in transgenic mice, although it is not sufficient on its own to fully restrict activity to keratinocytes. Within the HSsII element, the ets and AP-2 sites appear to be most critical in collaborating to regulate epidermal specificity in vivo.