Thalidomide is an immunomodulatory drug and primarily prescribed as a sedative and hypnotic. Treatment with thalidomide inhibited osteoblast development. Bone sialoprotein (BSP) is a mineralized tissue-specific protein that appears to function in the initial mineralization of bone. BSP expression is essentially restricted to differentiated cells of mineralized connective tissues and that the expression of BSP is developmentally regulated. To determine molecular mechanisms involved in the suppression of bone formation we have analyzed the effects of thalidomide on BSP gene expression.Thalidomide (10 μg/ml) decreased BSP mRNA levels at 12 h in ROS 17/2.8 osteoblast-like cells. Transient transfection analyses, using chimeric constructs of the rat BSP gene promoter linked to a luciferase reporter gene, revealed that thalidomide (10 μg/ml, 12 h) suppressed luciferase activities of pLUC3 (nts −116 to +60), pLUC4 (nts −425 to +60) and pLUC5 (nts −801 to +60) transfected into ROS17/2.8 cells. Further deletion analysis of the BSP promoter showed that a region within nts −43 to −84 was targeted by thalidomide. Introduction of 2 bp mutations in the inverted CCAAT box (ATTGG; nts −50 and −46), a putative cAMP response element (CRE; nts −75 to −68), a fibroblast growth factor 2 (FGF2) response element (FRE; nts −92 to −85) and a pituitary-specific transcription factor-1 (Pit-1) binding site (Pit-1; nts −111 to −105) showed that the thalidomide effects were mediated by the CRE and inverted CCAAT box. Gel mobility shift analyses showed that thalidomide increased nuclear protein binding to CRE. Whereas, inverted CCAAT box binding proteins did not change after stimulation by thalidomide.Antibodies against CRE-binding protein 1 (CREB1), phospho-CREB1, c-Fos, c-Jun, JunD and CREB2 disrupted CRE-protein complex formation. These studies, therefore, demonstrated that thalidomide suppresses BSP gene transcription mediated by CRE and inverted CCAAT box in the rat BSP gene promoter.