We have previously demonstrated that the core promoter of rat ribosomal RNA gene (rDNA) contains an E-box-like sequence to which the core promoter binding factor CPBF binds and that the 44 kDa subunit of this protein is immunologically related to USF1, the helix--loop--helix-zipper DNA binding protein. Further, we showed that RNA polymerase I (pol I) transcription in vitro is competed by oligonucleotides containing USF-binding site, which suggested a key role for USF in rDNA transcription. To prove the potential role of USF in pol I transcription in vivo, USF1 and USF2 homodimers and USF1/USF2 heterodimer were overexpressed in CHO cells by transfection of the respective cDNAs. Co-transfection of a plasmid containing rDNA followed by primer extension analysis showed that overexpression of USF1 and USF2 as homodimers resulted in inhibition of rDNA transcription by as much as 85-90% whereas overexpression of USF1/USF2 in the heterodimeric form activated transcription approximately 3.5-fold. Transfection of mutant USF2 cDNA that is devoid of the basic DNA-binding domain produced only minimal inhibition of rDNA transcription. These data show that USF can modulate transcription of rRNA gene in vivo by functioning as a repressor (homodimer) or activator (heterodimer) of pol I transcription in vivo and suggest that inhibition of rDNA transcription may be responsible for the antiproliferative action of USF homodimers.