Caldesmon, which plays a vital role in the actomyosin system, is distributed in smooth muscle and non-muscle cells, and its isoformal interconversion between a high M(r) form and low M(r) form is a favorable molecular event for studying phenotypic modulation of smooth muscle cells. Genomic analysis reveals two promoters, of which the gizzard-type promoter displays much higher activity than the brain-type promoter. Here, we have characterized transcriptional regulation of the gizzard-type promoter. Transient transfection assays in chick gizzard smooth muscle cells, chick embryo fibroblasts, mouse skeletal muscle cell line (C2C12), and HeLa cells revealed that the promoter activity was high in smooth muscle cells and fibroblasts, but was extremely low in other cells. Cell type-specific promoter activity depended on an element, CArG1, containing a unique CArG box-like motif (CCAAAAAAGG) at -315, while multiple E boxes were not directly involved in this event. Gel shift assays showed the specific interaction between the CArG1 and nuclear protein factors in smooth muscle cells and fibroblasts. These results suggest that the CArG1 is an essential cis-element for cell type-specific expression of caldesmon and that the function of CArG1 might be controlled under phenotypic modulation of smooth muscle cells.