Osteocalcin (OC) is a bone-specific vitamin D- responsive protein that is developmentally expressed during osteoblast differentiation. In transient transfection assays, as little as approximately 0.1 kilobase (kb) of the OC proximal promoter is sufficient for basal expression. Because eukaryotic genes are packaged as nucleosomes that contribute to both chromatin organization and transcriptional control, we functionally examined the activity of OC promoter constructs within a chromatin context. ROS 17/2.8 osteosarcoma cells were stably transfected with a series of rat OC promoter-reporter constructs, containing progressive 5'-deletions. The results demonstrate that in contrast to transient transfection assays, the proximal 0.11-kb promoter is no longer active when integrated in the genome. Progressive gain of basal expression with 0.35-, 0.53-, and 0.72-kb promoters suggests that upstream sequences facilitate the formation of an appropriate higher order nuclear structure, thereby potentiating the activity of the chromosomally integrated proximal promoter elements. This is consistent with location of both deoxyribonuclease I (DNase I)-hypersensitive sites and nuclear matrix protein-DNA interaction sites in the osteocalcin promoter. Vitamin D responsiveness in the stably transfected cells is obtained with the inclusion of 0.53 kb or additional upstream promoter sequences. Therefore, these sequences satisfy the requirements for binding of basal and enhancer transcription factors as well as interactions between them within a chromatin context. Both maximal basal expression and maximal vitamin D responsiveness are obtained with cells carrying either the 0.72-kb or the 1.1-kb promoter fragment. Cells carrying the 1.1-kb promoter show DNase I hypersensitivity at both the basal promoter and the vitamin D response element-containing domains, locations that also exhibit DNase I hypersensitivity in the endogenous OC promoter. In addition, we have documented changes in the basal activity and vitamin D responsiveness of the stably integrated 1.1 kb promoter as a function of cell density-mediated growth inhibition, which is accompanied by up-regulation of bone phenotypic genes. Thus, important aspects of OC gene transcriptional regulation that cannot be investigated in transient transfection assays can be addressed using ROS 17/2.8 cells stably transfected with OC promoter-reporter constructs.