Connective tissue growth factor (CTGF/CCN2) is a cysteine rich, extracellular matrix protein that acts as an anabolic growth factor to regulate osteoblast differentiation and function. In osteoblasts, CTGF is induced by TGF-β1 where it acts as a downstream mediator of TGF-β1 induced matrix production. The molecular mechanisms that control CTGF induction by TGF-β1 in osteoblasts are not known. To assess the role of individual Smads in mediating the induction of CTGF by TGF-β1, we used specific Smad siRNAs to block Smad expression. These studies demonstrated that Smads 3 and 4, but not Smad 2, are required for TGF-β1 induced CTGF promoter activity and expression in osteoblasts. Since the activation of MAPKs (Erk, Jnk and p38) by TGF-β1 is cell type specific, we were interested in determining the role of individual MAPKs in TGF-β1 induction of CTGF promoter activity and expression. Using dominant negative (DN) mutants for Erk, Jnk and p38, we demonstrated that the expression of DN-Erk caused a significant inhibition of TGF-β1 induced CTGF promoter activity. In contrast, the expression of DN-p38 or DN-Jnk failed to inhibit activation of CTGF promoter activity. To confirm the vital role of Erk, we used the Erk inhibitor (PD98059) to block its activation, demonstrating that it prevented TGF-β1 activation of the CTGF promoter and up-regulation of CTGF expression in osteoblasts. Since Src can also act as a downstream signaling effector for TGF-β in some cell types, we determined its role in TGF-β1 induction of CTGF in osteoblasts. Treatment of osteoblasts with a Src family kinase inhibitor, PP2, or the expression of two independent kinase-dead Src mutant constructs caused significant inhibition of TGF-β1 induced CTGF promoter activity and expression. Additionally, blocking Src activation prevented Erk activation by TGF-β1 demonstrating a role for Src as an upstream mediator of Erk in regulating CTGF expression in osteoblasts. To investigate the involvement of the TGF-β1 response element (TRE) and the SMAD binding element (SBE) in CTGF induction, we cloned the rat CTGF proximal promoter (− 787 to + 1) containing the TRE and SBE motifs into a pGL3-Luciferase reporter construct. Using a combination of CTGF promoter deletion constructs and site-directed mutants, we demonstrated the unique requirement of both the TRE and SBE for CTGF induction by TGF-β1 in osteoblasts. Electro-mobility shift assays using specific probes containing the TRE, SBE or both showed TGF-β1 inducible complexes that can be ablated by mutation of the respective motif, confirming their requirement for TGF-β1 induced CTGF promoter activity. In conclusion, these studies demonstrate that CTGF induction by TGF-β1 in osteoblasts involves Smads 3 and 4, the Erk and Src signaling pathways, and requires both the TRE and SBE motifs in the CTGF proximal promoter.