Cardiac fibrosis is marked by increased deposition of extracellular matrix components including fibrillar collagens, leading to impaired cardiac contractility and function. We recently demonstrated that the transcription factor scleraxis is expressed in collagen-producing cardiac fibroblasts and myofibroblasts, is up-regulated in the collagen-rich scar following myocardial infarction and is sufficient to transactivate the human collagen 1α2 (COL1A2) gene, suggesting a central role in fibrosis. Here we describe the mechanism of scleraxis-mediated regulation of the COL1A2 promoter. Using chromatin immunoprecipitation in primary human cardiac fibroblasts in combination with luciferase assays, we demonstrate that two E box sequences within the proximal COL1A2 promoter are required for scleraxis-mediated transactivation. Expression of scleraxis itself was induced by receptor Smad3, an effector of the pro-fibrotic growth factor TGF-β(1), and attenuated by inhibitory Smad7. TGF-β(1) augmented the effect of scleraxis on COL1A2 transactivation, an effect which was due to synergy between scleraxis and Smad3. Mutation of the COL1A2 Smad-binding element significantly attenuated the ability of scleraxis to transactivate the promoter, while mutation of the scleraxis-interacting E boxes attenuated the effect of Smad3, suggesting that these factors form a common signaling complex at the promoter. COL1A2 promoter transactivation and Col1α2 gene expression in cardiac fibroblasts were completely abrogated by a scleraxis basic domain deletion mutant in a dominant negative fashion, blocking the ability of TGF-β(1) to activate collagen synthesis and suggesting that scleraxis-DNA interaction is absolutely required for this process. Scleraxis thus appears to play a key role in the transcriptional regulation of type I collagen synthesis.