The transcription factor activating enhancer-binding protein epsilon (AP–2ε) was recently shown to be expressed during late chondrocyte differentiation, especially in hypertrophic chondrocytes. In this study, we were able to reveal that the promoter of the type II collagen (COL2A1) gene, encoding the extracellular matrix protein type II collagen, is specifically regulated by AP–2ε. Expression of COL2A1 is downregulated at the transition of chondroblasts into hypertrophic chondrocytes and our data provide evidence that AP–2ε is involved in this process. In reporter gene assays, overexpression of AP–2ε in cartilaginous cell lines resulted in a significant reduction in COL2A1 core promoter activity of ~ 45%. Furthermore, we found that this process is dose-dependent and highly specific for the epsilon isoform. Computational analysis offered only a single putative AP–2-binding motif within the chosen promoter fragment but site-directed mutagenesis revealed this motif to be regulatory inactive. After expanding our screening to motifs containing minor differences from the classical AP–2 consensus sequence (5′–GCCN3GGC–3′), we determined the sequence 5′–GCCCAGGC–3′ ranging from position −128 to −135 bp as an important regulatory site and responsible for COL2A1 downregulation through AP–2ε. Interaction of AP–2ε with the COL2A1 promoter at this site was confirmed by chromatin immunoprecipitation and electromobility shift assay. Further, our experiments suggest that at least one additional factor is involved in this process. This is the first study to prove regulation of COL2A1 by AP–2ε highlighting the role of the transcription factor as a modulator of cartilage development.