While investigating the differentiation potential of bone marrow-derived cells, we previously demonstrated upregulated expression of the lung-related surfactant protein B (SP-B) gene in hematopoietic progenitor cells (HPCs) when they were cocultured with macerated lung tissue. During coculture, HPCs differentiated toward a dendritic- like myeloid cell phenotype (hematopoietic progenitor cell-derived dendritic-like cells [HPC-DCs]). However, immature dendritic cells (iDCs) cocultured under identical conditions did not express SP-B mRNA before or after coculture. We have now further examined the regulation of SP-B expression in HPC-DCs and iDCs. Of the transcription factors involved in SP-B gene expression, neither cell type expressed TTF-1, HNF3a, or HNF3b, but both cell types expressed Sp1 and Sp3. Sp1 binding to the SP-B promoter was investigated in these cells. Three novel Sp1 binding motifs were identified in the mouse SP-B promoter. Using chromatin immunoprecipitation, it was demonstrated that Sp1 was bound to all three sites in HPC-DCs after coculture with lung tissue, but not in iDCs. We hypothesized that although genes from multiple lineages may be active in HPCs, gene silencing events, such as methylation, may subsequently occur to suppress expression of these genes in more mature myeloid cells, such as iDCs. Treatment with the demethylating agent 5-azacytidine resulted in expression of the SP-B gene in iDCs. These data indicate that tissuespecific transcription factors are not required to express the lung-related gene SP-B in hematopoietic progenitor cells. Furthermore, silencing events, such as methylation, may occur to suppress lung-related gene expression as progenitor cells become committed toward more mature hematopoietic cell phenotypes.