Osteocalcin (OC) is a bone-specific protein which is expressed postproliferatively by osteoblasts during late stages of differentiation. We have found that a silencer element is present within the rat OC gene (between nt +39 and +104), overlapping the OC signal prepropeptide-coding sequence. The presence of this sequence in OC promoter-CAT reporter constructs suppresses promoter activity in transiently transfected proliferating osteoblasts, which do not express OC, by up to 50-fold. This is the first demonstration of contribution from protein-coding sequences to silencing of animal genes. The element appears to be bipartite; silencer activity requires both the protein-coding sequence +39 to +63 and the +93 to +104 exon 1/intron 1 border region. Both of these domains contain sequences highly similar to silencer motifs in several other genes, including chicken lysozyme as well as rat collagen type II, insulin, and growth hormone. OC silencer activity is fully retained when the element is placed outside the RNA-coding region, 3' but not 5' of the OC-CAT fusion gene. Repression activity is orientation independent in the native position but requires the native orientation when located in 3' extragenic positions. The silencer does not inhibit the activity of the heterologous SV40 early promoter. These results suggest interaction between the transcribed silencer and specific OC promoter element(s) residing farther upstream. The OC transcribed silencer may contribute to developmental control of OC expression.