Prolonged culture of mesangial cells forms multifocal nodular structures, termed "hillocks," composed of cells and extracellular matrix (ECM), which may mimic the situation in the glomerular mesangium. Mesangial cells incorporated in hillocks show repressed expression of alpha-smooth muscle actin, a marker of mesangial cell activation/dedifferentiation. The aim of this study is to elucidate molecular mechanisms involved in this phenomenon, focusing on the activity of CArG box elements located in 5'-flanking region of the alpha-smooth muscle actin gene. Reporter mesangial cells were created to monitor the activity of CArG elements. These clones expressed beta-galactosidase gene (lacZ) under the control of CArG boxes. Within the hillocks, reporter cells showed repressed expression of lacZ as well as alpha-smooth muscle actin compared to the cells in two-dimensional cultures. Consistent with this result, the reporter cells embedded in collagen gel exhibited down-regulation of lacZ and alpha-smooth muscle actin transcripts. Deactivation of CArG box elements by transfection with either a dominant negative mutant of serum response factor or a dominant negative form of ternary complex factor Elk-1 led to depressed expression of alpha-smooth muscle actin gene. These data suggested that three-dimensional ECM primes mesangial cells to down-regulation of alpha-smooth muscle actin via deactivation of CArG box elements.