Runx2/CBFA1/AML3 is a master regulator of the osteoblast lineage and has been shown to directly control the transcription of numerous osteoblast specific genes including alkaline phosphatase, osteopontin and type I collagen. In its absence, ossification does not occur during development resulting in animals with cartilaginous skeletons and no osteoblasts. In humans, loss of one copy of Runx2 causes cleidocranial dysplasia characterized by malformations of the facial and cranial bones and the clavicle. Despite its important role in osteoblast biology, relatively little is known about the transcriptional regulation of the Runx2 gene. In the present study, we show that CCAAT/enhancer binding protein (C/EBP) is a negative regulator of Runx2 expression and acts by directly binding a C/EBP element located at -591/-576 within the osteoblast-specific Runx2 P1 promoter. Ectopic expression of C/EBP in C3H10T1/2 cells causes a reduction in Runx2 expression concomitant with a decrease in osteogenic potential during all-trans retinoic acid (ATRA)-induced differentiation. In non-differentiating cells, C/EBP can be found occupying the C/EBP negative response element within the Runx2 P1 promoter. ATRA, the effects of which are mediated by RAR and RAR in C3H10T1/2 cells, stimulates the dissociation of C/EBP from this element and promotes Runx2 expression. Thus, ATRA initiates osteoblastic differentiation of C3H10T1/2 cells, at least in part, by triggering the dissociation of C/EBP from the Runx2 promoter.