Secretogranin II is an acidic secretory protein with a widespread distribution in secretory granules of neuronal and endocrine cells. The secretogranin II gene contains, like other members of the granin family, a cAMP response element (CRE) in its upstream region. To investigate the functional significance of this motif, intracellular cAMP levels were increased in a neuronal cell line derived from the septal region of the brain and the level of secretogranin II gene expression was analysed. It was found that increased cAMP levels did, in fact, induce secretogranin II gene expression. To analyse the cis-acting sequence responsible for this induction, a hybrid gene containing the upstream region of the mouse secretogranin II gene fused to β-globin as a reporter was constructed. Transfection analysis revealed that cAMP-induced transcription of the secretogranin II promoter/β-globin gene in septal and insulinoma cells. DNA-protein binding assays showed that recombinant CRE-binding protein (CREB), produced in bacteria or human cells, bound in a sequence-specific manner to the secretogranin II promoter CRE. Moreover, deletion mutagenesis revealed that the CRE motif is a bifunctional genetic regulatory element in that it mediates basal as well as cAMP-stimulated transcription. Interestingly, cAMP had no effect upon secretogranin II gene transcription in PC12 and neuroblastoma cells. An increase in the intracellular cAMP concentration activated a GAL4–CREB fusion protein upon transcription in neuroblastoma cells indicating the integrity of the cAMP signaling pathway to the nucleus. Basal as well as c AMP-stimulated transcription, directed from the secretogranin II promoter was, however, impaired in insulinoma cells by overexpression of CREB-2, a negative-acting CRE-binding protein. These results indicate that competitive effects are likely to occur between CRE-bound transcriptional activators and repressers. We conclude that cAMP-stimulated induction of secretogranin II gene transcription is mediated by the CRE motif in a cell-type-specific manner, and is likely to depend on the balance between positive and negative CRE-binding proteins in a particular cell type.