Increased levels of c-fos and c-jun expression have been observed in differentiating epithelial cells. However, no data are available on activator protein 1 (AP-1) activity during keratinocyte differentiation. In this work we investigated c-fos and c-jun gene expression and AP-1-(12-O-tetradecanoylphorbol-13-acetate)-responsive enhancer element (TRE) binding activity during keratinocyte differentiation utilizing both authentic and in culture-reconstituted human epidermis. We demonstrate that: (i) in reconstituted epidermis, non-differentiated and differentiated keratinocytes express equivalent levels of c-Jun, while in reconstituted epidermis permanently grafted onto athymic mice, as well as in authentic epidermis, c-Jun is predominantly expressed in the granular layer of the tissue. Equivalent levels of c-fos expression have been found in all the layers of both reconstituted and authentic epidermis. (ii) Nuclear extracts from cultures enriched in differentiated keratinocytes display an 80-90% reduction of AP-1 activity when compared to extracts from cultures enriched in nondifferentiated cells. (iii) Cytosolic extracts obtained from cultures enriched in differentiated cells reduce, in a concentration-dependent manner, the AP-1 activity present in nuclear extracts of both mammalian and Drosophila cells. (iv) The specific TRE binding activity of a recombinant c-Jun protein is significantly reduced by cytosolic extracts of differentiated keratinocytes, while the specific DNA binding of the purified recombinant human homeoprotein HOX4B is not. (v) The dephosphorylation, by alkaline phosphatase, of cytosolic extracts increases the inhibitory activity already present or makes evident a latent activity.